Linux: Always a Bridesmaid

Of course, prognosticators perennially say Linux is on the verge. It gets high marks for security and stability and is widely used behind the scenes in corporate servers, making it a natural candidate to steal desktop thunder from Microsoft's dominant Windows. Yet Linux PCs still represent less than 2 percent of the market.

On a Roll

This time, though, there's actually evidence of momentum.

While the best features in the latest Windows release, Vista, require top-notch configurations that can quickly ramp up a PC's price, one of the hottest segments of the industry involves inexpensive computers.

Laptops under US$400 are real possibilities now, and some of the most buzz-worthy use Linux, such as Asustek Computer's EeePC and the One Laptop Per Child Foundation's $200 "XO" computer for schoolchildren. Linux also is available on slim little "netbooks" being pushed by Intel (Nasdaq: INTC) .

Not only is Linux essentially free to the PC vendor, but the operating system also is better suited than Vista for cheap PCs' spartan hardware designs. (Windows XP is available on scaled-back PCs like Intel's Classmate, but it's unclear what will happen after Microsoft soon stops selling XP to the general public.)

Cost a Factor

Amazon.com's (Nasdaq: AMZN) top-selling PCs include several Asustek Linux machines. Although Wal-Mart (NYSE: WMT) recently stopped a test run of selling Linux PCs in some stores, the company says it will continue to offer them online.

Business computing suppliers are finding open source desktops especially gaining traction in cost-conscious developing markets. For example, a PC distributor in Eastern Europe is packaging software from IBM (NYSE: IBM) and Linux vendor Red Hat (NYSE: RHT) to create Microsoft-free desktops for that market.

One buyer is Aleksandar Spagnut, a director of Moscow-based Rushotel, which needed new desktop PCs for a hotel-building project. Spagnut said his company saved 30 to 35 percent over comparable Windows machines. He added that Linux PCs are now common enough that a snowball effect is emerging, whereby technical support and "drivers" -- which essentially tell programs how to interact with hardware -- are much easier to find.

"This really makes the difference," he said.

Linux might benefit from a changing conception of what computers are for. With the rise of Web-based applications that reduce the need for desktop-bound software, more of the action comes through an Internet browser now. The feel of the underlying operating system is less important.

Like a Glacier

That means Linux consumers can get a lot out of their computers even if they are put off by what many reviewers still cite as Linux's biggest flaw: its uneven user-friendliness. Some tweaks to Linux machines require higher-than-average computing savvy, although this is less of an issue than in the past.

Perhaps more importantly, if the desktop operating system fades further into the background, PC makers could have greater incentive to save money on it by offering Linux. The price that big PC manufacturers pay Microsoft for Windows varies and is not disclosed, but is believed to commonly exceed $50 per PC.

"I'm a big believer in the inevitable forces of economics -- they're like glaciers," said Mark Shuttleworth, CEO of Canonical, which this month is releasing a new version of Ubuntu, a leading version of Linux that can run PCs. "Glaciers carve out terrain. It takes time."

Battling for Share

Linux on the desktop doesn't have to take off like crazy to really start to matter. Of the 981 million PCs in existence worldwide last year, 1.7 percent ran Linux, according to Gartner (NYSE: IT) . That sounds paltry. However, Apple's (Nasdaq: AAPL) Mac operating system accounted for just 2.5 percent, and Apple is considered a significant, influential alternative to Windows.

"Every point is billions of dollars to Microsoft," says Jim Zemlin, head of The Linux Foundation, a consortium devoted to advancing Linux. His group is meeting with top PC makers next week in Austin, Texas, in hopes of accelerating their efforts to sell Linux machines.

The top PC makers have so far treaded carefully. Dell's (Nasdaq: DELL) Web site sells Ubuntu computers in a separate section for open source PCs, out of direct comparison with Windows machines. Dell spokeswoman Anne Camden said the placement reflects the fact that Linux is still not a mainstream consumer product.

Marketing Challenges

Linux is partly hampered by its greatest asset: its widely dispersed nature.

Linux is a core set of code called a kernel; developers build different layers of software on top of it to serve different computing purposes. (Open source providers make money by charging for add-on services, such as technical support or security upgrades.)

As a result, Linux comes in many flavors, known as distributions, fracturing the push Linux might otherwise make. In fact, some programs written for one distribution don't work in another.

"We haven't figured out to how to federate the marketing of the technology as well as we've figured out how to develop the technology," Zemlin acknowledged.