CCID Consulting’s research shows that China's Linux software market would reach a total size of 200 million Yuan, up by over 20% over 2006. It keeps high growth in the operating system market.

Fig. 1 Size and Growth of China's Linux Software Market, 2006-2007

Source: CCID Consulting, November 2007

In 2007, China's Linux software market shows 2 key development characteristics:
Market resources were further concentrated, and vendors cooperated more. In 2007, users had higher requirements for vendors’ brand, technological strength and implementation experiences. China's Linux software market was more concentrated. Big vendors such as Red Flag Software, China Standard Software Co., Ltd., Novell, TurboLinux and Redhat took up over 90% of the market shares, while small Linux vendors faced greater survival challenges. To cope with pressures from Windows or competitions from other vendors in the same industry, Linux vendors carried out all forms of cooperation while improving their own R&D strength and recruiting personnel.

Centralized procurement was no longer a hot spot as it used to be, and regional channels became a focus. Centralized government procurement of copyright software a few years ago once drove up a big increase in the Linux sales revenue. Some big industry orders also led to the fast growth of the Linux market. In the whole year of 2007, large-scale centralized procurement did not emerge. The market shifted further to regional and Tier-2 and -3 market. Linux vendors also quickly adjusted their past sales structure and order strategies. Regional sales was brought to an important position and channel building gradually expanded. Vendors’ direct sales entered deep into the market in the major regions and cities of lower tiers. They cooperated with channel partners, ISVs and SIs to get orders and scored wide achievements in the regional markets.

Based on a comprehensive analysis of current market characteristics and competition patterns, CCID Consulting forecasts that China’s Linux software market will present 2 main trends in the next few years:

Competitions will differentiate, and customzied and mobile Linux looks promising. Currently, Linux customized towards different industry customers’ demand is in a rising trend. Hotel-, lottery- and rural edition-based customized Linux systems have won recognition from the market. Driven by the growing demand for IT applications in the logistics and energy sectors, customized solutions will win growing favors from new customers. Thanks to their open, strong scalability and low cost advantages, Linux systems are getting recognition from mobile terminal equipment makers. Linux systems are expected to harvest more in the mobile field.

Market demand will become dispersed from being concentrated, and the SMB and non-traditional markets will gradually attract attention. Market growth will gradually slow down in North, East and South China where the level of IT applications is high. There will be notable demand in Northeast, Northwest and Southwest China where the level of IT applications is low. The market will also be more pushed into tier-2- and -3 cities. Numerous SMBs and their rapidly rising demand for IT applications and price sensitivities will drive forward the expansion of Linux in the SMB market. There will also be a gradual release of demand in the manufacturing industry with a large number of enterprises, in the fast-growing logistics industry and the educational sector with big investment from the State. This will also become a field of key competitions for vendors.