Shuttleworth will burn fortune for Ubuntu
In the wake of the launch of Ubuntu 8.10, Mark Shuttleworth - the founder of the Ubuntu project and the chief executive officer of Canonical, the commercial entity behind Ubuntu - hosted a conference call with the press and analyst community. And in that call, Shuttleworth, who is not afraid to shell out money for a good cause - such as the $20m he paid to be the second tourist in space, via a Russian Soyuz mission - made it clear that he is perfectly happy to fund Ubuntu until it gets on its own financial two feet.
Canonical is a private company, one that was founded in 2004, after Shuttleworth came back down to earth. While most of you know this, many of you may not know that Shuttleworth is the founder of Thawte, a South African company that became the biggest seller of digital certificates and was sold to VeriSign for $575m in stock in 1999.
Shuttleworth's net worth is not known, but he clearly can afford to indulge in the Ubuntu effort, and he made no apologies for where the company is at in terms of growth and sales and his continuing personal investments in Ubuntu.
"We continue to require investment. I can continue to be careful with my pennies as I make what I consider to be a good investment," Shuttleworth said in the call. He explained that Canonical - which has more than 200 employees in Europe, North America, and Taiwan - was not cash flow positive. But he said it could be if the company focused on its core desktop and server products and did not make investments that Shuttleworth and his Canonical team as well as the larger Ubuntu community deem necessary for the long-term success of Ubuntu.
It is clear that Shuttleworth wants to make these investments. He said that Canonical had "several million dollars" in annual revenues derived from support and related services for the Ubuntu distribution, but that he had "no objection to funding the business for the next three to five years."
Shuttleworth added that the company could be positive in two years, but that it will probably take longer than that, given the investments that needed to make Ubuntu more pervasive on both the server and the desktop.
So, what metrics does Shuttleworth use to gauge his investments? More human ones than perhaps we are used to hearing about. "We have customers coming back and new customers knocking on the door," Shuttleworth explained. While the exact numbers for Ubuntu adoption are unclear, adoption rates - which Canonical gets anecdotally and from numbers it gets from application software vendors like Alfresco Software or IT box counters like IDC - are on the rise, and this is a key metric.
(This is the same metric that Sun Microsystems' president and chief executive officer Jonathan Schwartz cites as Sun's success for Solaris 10 and Java. But as a public company, Sun has a duty to actually get revenues and make money - unlike privately held Canonical, which is on a mission that is cultural more than economic).
The uptake of Ubuntu by third-party makers of IT gear in Asia is another key metric Shuttleworth is using, and Canonical is working with the top ten ODMs in Asia, although not all of them have Ubuntu-based products. Yet.
Precise Ubuntu installed base numbers are impossible to obtain, but Shuttleworth said the most recent estimate is about 8 million users for the Linux variant. Ubuntu does not have any call-home features to help Canonical count installations. That's because Shuttleworth does not want to violate users' privacy or put up any barriers to adoption for the software. "We actually have no idea," Shuttleworth admitted.
On the server front, IDC did a survey in 2007 that showed that 20 per cent of large US companies had Ubuntu installed. Other IDC estimates give Ubuntu about a 3 per cent share of the server operating system racket, by box count (certainly not revenue).
A survey that Canonical did as part of the 8.04 LTS release this year - which had over 100,000 responses - indicated that about 25 per cent of those polled had Ubuntu supporting production applications. This is pretty good for a Linux variant that was really aimed at the desktop when it launched in 2004 and a server platform that is only a little more than two years old.
With the launch of Ubuntu 6.06 LTS (Long Term Support) - which gives servers support for five years and desktops for three years instead of the normal 18-month support life for an Ubuntu release and the kicker 8.04 LTS release earlier this year - Canonical has done a pretty good job getting its foot in the data center door. "We see a surprising amount of non-LTS releases on servers," said Shuttleworth, and that is because the quicker release cycle of the normal Ubuntu releases allows it to run on the latest-greatest iron and deliver the most current practical support for virtualization features.
The final metric Shuttleworth is using as he guides the Ubuntu distribution and pushes the Canonical business is the happiness and satisfaction users have with the distro. It is hard to put a dollar value on this, unless you count the software that companies don't buy when they are happy with the Ubuntu distribution.
When asked if anyone can make money selling a desktop Linux, Shuttleworth was blunt and candid. "No. I don't think anybody can. And that is a good thing." The revenue model that Shuttleworth had when he created the Ubuntu project and the Canonical support organization was to give away the software and patches and rely on tech support and other services that are required by some users and businesses to generate the revenues that give people at Canonical their jobs.
"It is at the heart of our philosophy to not make money on the desktop." And in this, Shuttleworth believes that Canonical is on the leading edge of the software industry, and that all software suppliers - including Microsoft - will have to shift away from licensing bits to selling services to make their daily bread.
By Timothy Prickett-Morgan
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