Linux continued to top the growth of all operating system products in China during the first quarter of 2007, growing 30.9 percent year-over-year, according to a study by CCID Consulting. CCID Consulting attributes the growth primarily to radiative effects of large-scale activities such as the 2008 Beijing Olympics Games and the World Expo 2010, as well as government policies supporting the Linux industry. The research group cites Microsoft, Oracle and Novell actions among grave external challenges to the Linux market during the quarter. The complete CCID Consulting press release follows.

BEIJING, May 8 /Xinhua-PRNewswire/ -- Data in CCID Consulting's Analysis Report on China's Linux Software Market in 2007Q1 show that operating sales revenues in China in 2007Q1 reached 1.234 billion Yuan, up by 9.4% over 2006Q1. Linux continued to top the growth of all operating system products. Its sales revenues reached 31 million Yuan, up by 30.9% year-on-year, continuing to maintain a fast growth momentum. Linux accounted for 2.5% of the overall non- embedded operating system market, up by 0.4% over 2006. However, it was still in a weak position as compared with Windows, Unix and other competing products.

Affected by Vista, Linux growth slowed down.

As China's GDP grew by 11.1% in Q1, the Linux market also maintained a relatively fast growth momentum. On one hand, this was closely related to the overall situation of national economic operations. On the other hand, it also benefited from the continuous pull of strategies towards the rise of Central China and the revitalization of Northeast China. A steady increase in IT application demand drove up the growth of the software market.

Thanks to the radiative effects of such large-scale activities as the upcoming 2008 Beijing Olympics Games and the World Expo 2010 Shanghai China, IT applications in some industries are gathering pace. To a certain extent, this has pushed forward the growth of the overall software market. In addition, State policy support for the Linux industry is also one of the driving forces for continuous market growth. However, since Microsoft introduced its Windows Vista operating system at the end of 2006, particularly after it signed a series of pre-installation agreement with leading PC makers, Linux growth slowed down in 2007Q1. The increased demand was basically concentrated on server-end Linux.

CCID Consulting's analysis of the vertical markets shows that government departments and big enterprises are still the main Linux users, accounting for a market share of 67.2%. The "copyright software" policy jointly implemented by the four major ministries and commissions has also benefited Linux. Cooperation between vendors in the industry has directly pushed forward further market growth.

As for industry segments, Linux market growth was mainly concentrated in the government, financial services and telecom sectors, which accounted for a market share of 34%, 22.5% and 21.2% respectively. The implementation of some government procurements, telecom and netbar projects and the upgrading of banking services systems were the important driving forces for the growth of Linux applications. In addition, the education sector achieved a market share of 10.4%, basically level with that of last year.

Linux faced more grave external challenges.

In the report, CCID Consulting pointed out that data released by Microsoft at the end of March showed that 20 million sets of Vista Personal Edition were sold worldwide in the first month of its introduction to the market. Of this, the sales volume of Vista Personal Edition in China was twice the initial sales volume of XP. All kinds of fast upgrading strategies and the $3 copyright Windows XP provided to government administrative departments in developing countries were yet another "war" bugle call from Microsoft to Linux. Meanwhile, Oracle staged offensives to Red Hat in the Linux services market. The dispute which Novell induced in the open source software industry further intensified competitive pressures in the Linux industry, adding too many uncertainty factors to the originally relatively weak Linux industry.

Vendors played their respective skills and competed on various fronts.

As for industry standards, to strengthen the competitiveness of the Linux industry, the Open Source Development Laboratory (OSDL) and the Free Standard Group (FSG) were merged into the Linux Foundation. It will soon introduce new test tools and thus strengthen Linux standards. This will greatly improve Linux's ease-of-use and low cost advantages.