As Mr. Matt (when you’re this big, they call you Mr ;-) writes, IDC published a report estimating the growth of the OSS software market. IDC estimates OSS software revenue growing from $1.8B in 2006 to $5.8B in 2011. That’s a 26% growth rate (vs. high single digit growth for the entire SW market).What are they counting to get to $1.8B in 2006?
After getting my hands on the actual report I have the following to report (PLEASE read the report to form your own opinions – a press release doesn’t do it justice. Neither does this post since the IDC copyright notice doesn’t allow for content reproduction without prior approval):
The market sizing does not include hardware or services related to OSS. What does it include? Simply put, it includes revenue from software like RHEL or MySQL (both are presented as examples of revenue that is counted), whether the revenue comes from a support subscription or a license agreement.
So here’s where I get a little confused.
Red Hat’s total revenue for the year ending Feb. 2007 was $400.624M. Now, let’s just say they made $400M in calendar year 2006. And really, $59.4M of that total was from training & professional services, which would not be included in the IDC figure. So, let’s say Red Hat did $350M in 2006 open source software revenue (see exclusions above). Based on this, let’s guesstimate (i.e. err on the side of over estimating) MySQL software revenue at $250M. Let’s add another $200M for all other flavours of Linux operating system software revenue (i.e. SuSe, RedFlag, etc). How about $200M to cover software revenue from SugarCRM, Zimbra, Alfresco, MuleSource, OpenLogic, SpikeSource, LogicBlaze and Hyperic? We’re up to $1B for 2006. So, where’d the other $800M come from??
Since my estimates are likely wildly off, it’s safe to assume that nearly every OSS vendor you can think of likely has their OSS software revenue accounted for in the $1B summation I provide above. And to the best of my understanding from the report, software revenue for a traditional software product, such as DB2, that runs on Linux would not be included in the $1.8B figure from IDC.
So, I ask again, where’d the other $800M come from?
Maybe I’m missing the point. Maybe I should worry less about the missing $800M and focus more on the nearly $1B being spent on OSS software. Fair point. And IDC does state that this is their first stab at a market estimate, so there’s room for future sizing adjustments.