Fence Sitters

1
Fence Sitters Network Effects

• Peter Corless
• 23 October 2003

2
Linux was hot. Then it was not.

• 1991 - Linus begins work, v0.02
• 1992 - Debian GNU/Linux released
• 1993 - SUSE Linux distribution
• 1994 - Linux v1.0 releases
• 1998 - KDE 1.0 a GUI for End-Users
• 1999 - Red Hat goes public
• 2000 - Red Hat, Caldera peak, then bust
• 2001 - Red Hat Caldera trough
• 2002 - MandrakeSoft goes public,slumps
• 2003 - Market picking up, barely

MARKET EXPECTATIONS WERE BATTERED
3
Linux Users Wild Guesses

• 1993 100,000 est.
• 1994 500,000 est.
• 1995 1,500,000 est.
• 1996 3-5 Million est.
• 1997 1.4 - 4.5 Million est.
• 2003 18 Million? est.

• 1997 230,000 Linux shipments
• 1998 748,000 shipments

The Linux Counter http//counter.li.org/
4
linux.oreilly.com SubscribersYear 2000

• 26 programmer/developer
• 19 system administrator
• 15 consultant
• 8 IS/MIS manager/staff
• 7 student
• 6 webmaster/web designer/producer
• 19 otherSource O'Reilly Network registered
  users survey February, 2000

STILL DRIVEN BY TECHNOLOGISTS, NOT END USERS
5
Linux Bangalore/2002 Demographics

• 61 Developers/Engineers/RD
• 15 Students
• 14 Sysadmins/Networking/Internet
• 4 Education/Training/Consulting
• 6 Other

CULTURAL SHIFT OCCURRING STUDENT ADOPTION
6
A Guide to Fence SittingBarriers to Adoption

• Market Competition Monetary-Political Forces
• Microsoft, Unix, etc.
• Allied Vendors for Services Products
• Installed Base Inertia
• Switching Costs
• Redevelopment Costs
• Social Barriers Human Inertia
• Status Quo Laziness
• Community/Individual Compartmentalization
  States, Markets, market segments, Companies,
  Business IT Management, Sysadmins, Developers,
  Users
• Resistance to change-for-sake-of-change
• Technological Religion
• Indifference Curves
• Learning Curves
• Quasi-Rationality

7
Emotional Barriers

• Gravity Wells of the Status Quo
• Loyalty, Satisfaction,Comfort, Joy
• Blissful Ignorance Laziness
• Mountains of Change
• Isolation, Dissatisfaction, Discomfort, Pain
• Intimidation of the New
• Desires
• Gifts mutually advantageous exchange
• Concerns
• Coercion Threats
• FUD Fear, Uncertainty, Doubt

8
Adoption Curve
Systems Admin Community (Server Market)
Carpetbaggers Dot.Comers
Developers Early Adopters
General Purpose Specialty Markets (Desktop,
Game, Embedded Linux)
Technology Champions
1991
1994
1997
2000
2003
2006
2009
9
Competitive Resistance Points
Windows 2000, Mac OS X
Windows 98
Windows Server 2003
Windows NT 4.0(1996)
Windows NT 3.1 (1993)
Solaris 9 Mac OS X 10.2
1991
1994
1997
2000
2003
2006
2009
10
SuccessesDeveloper/Server Markets

• Captured developer, systems administration
  technophile attention
• Significant inroads in server appliance markets
• Major OEM hardware supporters
• IBM, HP, etc. Even Sun!
• GUI Application Suites mean Linux desktop
  solutions can pass blush test
• Still considered too geeky and isolated to
  compete head-to-head with Windows or Macs.
• Sufficient for a Linux user to fit in with
  other OSs.

11
Present BarriersDesktop, Laptop, Devices

• Mass Market Mindshare
• Fighting Brand Names of Microsoft Apple
• No end-to-end strategy of server-to-desktop-to-d
  evices (a la .NET, or even iTunes)
• High Geek Factor
• Not for Home or Office Use?
• Still thought of as technology not business
  or family solution
• Few games (PS2-Linux is late-to-the-gate)
• Unification vs. Fragmentation
• Shades of original Unix shredding
• Can laissez faire compete with megalopolies?

12
Market Tipping

• Changing dominant players, or allowing a dominant
  player to emerge

Likelihood of Market Tipping to a Single
Technology
Low Economies of Scale
High Economies of Scale
Low Demandfor Variety
Unlikely
High
High Demand for Variety
Low
Depends
Source Information Rules, pg. 188, Carl Shapiro
Hal R. Varian
13
Are there economies of scale in the Linux market?

• Demand-side economies of scale
• Network Effect
• Metcalfes Law Power of Net Nodes2
• Superior Utility Value
• Performance/Productivity Revolution
• Compatibility
• Progress Migration Path
• Supply-side economies of scale
• Consolidated production
• Strong distribution channels

14
We Have Met the Enemy,and He is Us Pogo

• Fractionalization of market due to Linux
  flavors from multiple vendors
• Microsoft faces the same problem
• There seems to be tipping towards dominant
  Linux vendors OEM/solutions partners
• Intellectual property challenges
• Continuing challenge to look at market from
  outsiders point-of-view.
• Technological development must evolve towards
  user-centered design
• Customer and business services will become more
  important to success than point product features.

15
Fence Sitter Use CasePeter Corless

• Long-time user of Macintosh, Unix, Windows
  operating systems
• Prefers emacs to vi (old CMU habit)
• Has MacOS X, Windows systems
• Small business web site on FreeBSD 4.4
• Invested in a (now defunct) Linux startup.
• Open-minded, but cant spend much time on
  technology (has business to run)
• Interest from a some day Id love to have time
  to code, and then Ill get a Linux box fantasy.

16
Barriers for Adoption

• Web Site
• OS provided by my ISP (Verio. Go hunt them down!)
• Why migrate content to another box at same ISP or
  abandon ISP just to jump to Linux?
• Wouldnt mind if the ISP swapped what site was
  running on, but only if there was no cost to
  change.
• Linux is killed on the Indifference Curve
• No current killer app running under Linux for
  web services that doesnt also run on BSD
• Value of Linux unclear vs. FreeBSD. (Both have
  perl, php, egrep, emacs, MySQL, etc., right?)

17
More Barriers for Adoption

• Desktop
• Marriage to application suites (MS Office)
• Key applications on other OSs (Adobe Photoshop
  Illustrator)
• Technology splooge
• Maintaining a third OS is too much
• Whats the payback?
• Lack of hands-on opportunities
• Lack of time to get started maintain
• No killer app that makes it all worthwhile

18
References

• http//www.nevod.ru/linux/news/article/linuxmarket
  .html
• http//news.com.com/2100-1001-984010.html
• http//www.newsfactor.com/perl/story/11177.html
• http//thewhir.com/features/linux-market-share.cfm
  
• http//www.newsfactor.com/perl/story/22290.html
• http//www.oreillynet.com/pub/a/mediakit/linuxaudi
  ence.html
• Information Rules A Strategic Guide to the
  Network Economy, Carl Shapiro and Hal R. Varian,
  Harvard Business School Press, 1999 (ISBN
  0-87584-863-X)