Update: High growth rates for open source in Germany

DÜSSELDORF, GERMANY - Germany is poised to see sales of open source software and services grow substantially over the next few years, particularly in the public sector, according to a new report published Tuesday.

In its report "The Market for Open Source Software in Germany," Soreon Research projects that sales of open source software and services will rise from €131 million (US$152 million) today to €307 million by 2007.

"When we talk about sales of open source software, what we mean, essentially, is a service that a vendor provides in copying the software on a CD and distributing the disc to a customer," said Soreon company spokesman Christian Lipski.

SuSE Linux, for example, offers enterprises a package that includes CDs and documentation, as well as the right to receive patches and updates and to use the company's hotline for technical support, said company spokesman Christian Egle.

According to the study, the sale of open source software in Germany will account for only €10 million of the €131 million in sales projected for the year. The lion's share comes from support services, which will generate €81 million in sales, followed by training at €27 million and installation services at €13 million.

The number of companies and organizations deploying open source software in Germany will increase from 12 percent today to 18 percent by 2005 and 24 percent by 2007, the market research group said in a statement.

The study was based on interviews with 150 companies and organizations in the private and public sectors, excluding the agricultural market, using 10 PCs or more, said research director Steffen Binder. "Based on this, 12 percent amounts to roughly 310,000 companies and organizations using open source products in Germany," Binder said.

The growth will be fueled in large part by the public sector, Soreon said. The market research group estimates that the public sector will account for 26 percent of sales of open source software and services in 2007, up from 6 percent today.

Indeed, numerous government bodies and other public administration groups have moved to open source software, ever since the federal government struck a deal with IBM Corp. to supply discounted computers with preinstalled Linux software.

The major reasons companies cited for using open software were cost, security and stability, Soreon said. Around 38 percent of the polled companies and organizations said savings was the main reason for choosing open source software. Around 28 percent cited security and stability as their main reasons.

Of the open source software products on the market, Linux and the services associated with are by far the largest revenue-generator. Soreon predicts that Linux software and services will generate €92 million in sales this year.

Nevertheless Microsoft, the vendor perhaps most threatened by a move to open source products, said it continues to cut deals with government agencies in Europe.