MT5002 Management of Industrial R&D


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

Linux is an Operating System (OS) for which the source code is available free without restrictions on use or requiring royalties. When it was introduced, Linux was inferior in performance to other operating systems like Unix and Windows NT. However, the Linux OS, distributed through major commercial-based vendors such as Red Hat, is inexpensive compared to other server operating systems. After years of improvements, the functionality has improved so much that it threatens to displace the leading commercial UNIX distributions. Linux OS can save organizations significant amount of dollars compared to the use of proprietary, licensed operating systems. It is highly regarded for its speed, reliability and security, and is used in all industries. Linux OS has been evolving through contributed efforts from developers worldwide.

As a discontinuous innovation, Linux OS had created a "new market disruption" as an inferior product by most measures of performance, subsequently improving and fitting a new or emerging market segment. This paper aims to examine the ways in which Linux OS is developed and managed from the aspect of a discontinuous innovation. The first few sections give an introduction on discontinuous innovation and a brief history of Linux OS. The next section introduces the major players involved through discussion on the Linux distributions. The next few sections discuss on the management strategies recommended for discontinuous innovation, identifying the strategies used by Linux distribution companies, and the possible trend in this technology. Finally, the conclusion will look at the progress of Linux OS as a discontinuous innovation based discussions in the previous sections.

Discontinuous Innovation
According to William Miller and Langdon Morris [1], discontinuous innovation brings forth the conditions that emanate from fundamentally different new knowledge in one or more


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

dimensions of a product or service. Discontinuous innovation falls outside of existing markets or market segments, and when successful extends and redefines the market, exposing new possibilities. Discontinuous innovation affects both the consumers and producers greatly. It introduces products and value propositions that change prevailing consumer habits and behaviors in a major way. The market created undermines the competences and

complementary assets on which existing competitors have built their success. Discontinuous innovation can be further divided into Radical Innovation and Disruptive Innovation. Exhibit 1 in Appendix A gives a summary of the conditions when discontinuous innovation falls into one of the previously mentioned two categories.

Seen as a hobbyist-approach to OS development, firms such as Microsoft, Apple and major Unix-OS developers such as Sun, IBM and HP, did not see Linux OS as a threat in the early 1990s. Today, apart from BSD, Linux OS has the ability to support almost any CPU and it also supports most devices in the market. A comparison of the performance of various OS done by Phil Hughes [2] in Exhibit 2 shows that performance and cost edge Linux has over the competing OS. As seen in the worldwide OS paid licenses market share chart from Electronic Business [3] and the unit market distribution chart by Business Week [4] in Exhibit 3 and 4 respectively, Linux OS has experienced tremendous growth in the market share for both personal desktops and servers OS. These are indications that Linux OS is deemed as a disruptive innovation. Exhibit 5 shows the point of the disruption cycle which Linux OS is currently at.

History of Linux Development
This section gives a brief history of the initial development of the Linux-based operating systems. In 1983, Richard Stallman started the GNU Project to create an open-source UNIX-


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

like, POSIX-compatible operating system (OS) composed entirely of free software. Stallman then created the Free Software Foundation in 1985 and wrote the first draft of the GNU General Public License (GPLv1) which grants the recipients of a computer program the rights of the free software definition and uses copyleft to ensure the freedoms are preserved, even when the work is changed or added to. Most of the necessary operating system components, including libraries, compilers, text editors, and a Unix shell were almost completed by the early 1990s. However, the lower level of the OS which consisted of a kernel, device drivers, and daemons was incomplete.

In 1991, a graduate student from the University of Helsinki, Linus Torvalds, began working on the Linux kernel, which was the core component of an OS that provides the lowest-level abstraction layer for the resources such as memory, processors and I/O devices and other system calls. In order to allow commercial redistribution, Linux was licensed under GPLv2. Torvalds posted his codes on the Internet and invited other kernel developers to work with the GNU project so as to allow the Linux kernel to operate with GNU components. This made it possible to complete the fully functional OS which Stallman started out to create. Future versions of operating systems that were developed based on the Linux kernel core were then commonly referred as Linux, after the name of the kernel which Torvalds developed.

Linux Distributions
Unlike other proprietary products, Linux operating systems were developed in a collaborative fashion by the open source community. Despite the collaborative nature, competing products and variant versions were developed. This section identifies some of the major players which will drive the further development of Linux OS as a major commercial OS.


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

Given the GPL software licenses that permit redistribution, several larger scale projects sprung up. They developed OS consisting of the Linux kernel, non-kernel parts of the GNU OS, and collection of software produced by stand-alone projects. These projects form the Linux distributions or commonly termed as ‘Distro’. There are currently over three hundred commercially-backed and community Linux distro in active development. Appendix B [5] illustrates the timeline of some of these major Linux distributions since 1991. The timeline gives an indication on the major players and how companies use community-based distro as platform designs to further develop their own product lines. This is a unique feature from the development of other proprietary products. Appendix C [6] gives a brief summary on these major and most popular distributions.

Management and Marketing Strategies
With an understanding on the Linux OS, the major players, as well as establishing it as a disruptive innovation, the next few sections will discuss on the recommended strategic management and marketing development plans, identifying strategies employed by existing Linux firms and the future possible trends. The term Linux OS in this section refers to the array of Linux distributions in the market.

Linux OS have scaled up the markets and can further do so with the following points: • With the advantage of a great pool of talent developing it, through leverages from the open source community, firms must devise a viable business model that will continue to keep prices competitive and yet profitable through high volume of transactions. Red Hat’s subscription-based reliable enterprise-ready solution business model is one such example. In its most recent publicly reported quarter, its revenue increased 45 percent to $105 million, 84 percent of that coming through recurring support subscription contracts [7]. • To become the dominant design, Linux OS need to create a consumer bandwagon. One way to create the bandwagon is to manage consumers’ expectation, giving them


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

the impression that a choice has already been made. Dell recently acknowledged that 83,000 users have urged it to sell PCs with Linux pre-installed, but it has fallen short of accepting their suggestion. Dell is the number PC seller in 2006 [8]. By collaborating with Dell to sell PCs with Linux pre-installed, consumers would see Linux OS as a widely accepted choice. • For a consumer bandwagon to emerge, sustained efforts must be made to reduce the customers’ risk when they adopt the product [9]. This is highly critical for OS. Market-leading Microsoft families of OS have been plagued by securities vulnerabilities, and are high potential of threats and attacks. They have also made slow progress in fixing these vulnerabilities [10]. On the other hand, Linux OS have been traditionally secure and low potential of threats and attacks. The importance of security and advantage Linux OS have in this area should be highlighted to the consumers. • As discussed in the previous section, Linux OS unique distribution channels make it very easy for customers to evaluate them, before making purchases. The proliferation in the use of Internet has also made it faster and popular for customers to obtain Linux OS through this distribution channel. Schools and institutions can be another distribution channel. Students can benefit from the lower cost OS and can adapt to the Linux OS faster. • Linux OS can create alliances with key suppliers and producers of complementary goods. This will ensure the supply of complementary goods and help control access to them. One overlapping strategy mentioned before earlier is to do so through the collaboration with Dell and other major PC sellers such as HP and Lenovo. By supporting almost any CPU and most peripherals, Linux OS are highly compatible. • Despite being highly compatible, there has been a general misconception that Linux OS are for technical geeks and the terminal-based user-interfaces are difficult to use. However, this is no longer true with the development of Linux OS with rich GUI such as Fedora, Mandriva and Ubuntu. Therefore, the user experience should be area of development focus and again, Linux OS should be marketed on the major improvements on user-friendly GUI. • As reliable and versatile option for OS, Linux OS can further open up new markets, by tapping into other industries, such as manufacturing and entertainment industry.


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

The lightweight designs of some Linux OS make them a good choice for embedded devices.

Future Trends
In March 2007, the French National Assembly had decided to switch from Windows to Linux for its 1154 desktops [11]. This followed moves in switching to open source applications such as OpenOffice and Firefox. The need for cost reduction will continue to be an important factor to draw more customers to Linux OS. Major industry players are starting to either acquire the Linux technology or collaborate with major Linux companies to offer an alternative choice for their customers. In November 2006, Microsoft signed a partnership with Novell that allowed them to recommend Suse Linux to those who want an environment mix of Microsoft and open-source software [12]. It is likely that there will be more examples of collaborations or acquisitions. However, it will be unlikely for industry leaders such as Microsoft to fully consolidate the Linux OS market as a large part of the development still remain with the open source community through GNU GPL.

Linux OS continues to grow with its wealth of tools despite remaining low cost. The large community in support of the development allows it to react fast to the market demands. It has already proved that it will port to new computer architectures from multiple vendors. With performance exceeding the industry leading OS, the market share of Linux OS is rapidly increasing. After 13 years of development, it is proving to be disruptive to market leaders such as Microsoft which are starting to react to these trends. From the disruptive innovation aspect, Linux OS has grown to meet the high quality use and it is likely that more time is needed before the technology meet the high demand of use - the extreme end of the disruptive innovation cycle. This paper has recommended a few ways in which firms can upscale the market to achieve real market dominance.


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

[1] W. L. Miller and L. Morris, Fourth Generation R&D: Managing Knowledge,

Technology and Innovation. John Wiley & Sons, Inc, 1999.


Phil Hughes, Operating Systems Comparison, Retrieved on 24 Mar 2007.


R. Bill, Desktop Wars, the Sequel, Electronic Business Vol. 30 Issue 2, 2004.


Where is Linux Going, Business Week Online, 2005. Retrieved on 24 Mar 2007.


Linux Distro Timeline, Historique des Distributions Linux, 2006. Retrieved on 16 Mar 2007.


C. Lefebvre, Overview of the Ten Major Linux Distributions,, 2006. Retrieved on 25 Feb 2007.


S. Shankland, Red Hat hopes to solidify lead with new Linux, CNET News, 2007. Retrieved on 14 Mar 2007.


E. Savitz, Dell #1 PC Seller for 2006, Yahoo Finance, 2007. Retrieved on 24 Mar 2007.


Centre of Management of Science & Technology MT5002 Management of Industrial R&D


C. C. Markides and P. A. Geroski, Fast Second: How Smart Companies Bypass

Radical Innovation to Enter and Dominate New Markets. John Wiley & Sons, Inc, 2005.


J. Jones, January 2007 - Operating System Vulnerability Scorecard, CSO, 2007. Retrieved on 24 Mar 2007.


C. Guillemin, French parliament picks Ubuntu for Linux switch, CNET News, 2007. Retrieved on 12 Mar 2007.


I. Fried, Microsoft: Novell deal a milestone despite squabbles, CNET News, 2007. Retrieved on 9 Feb 2007. Cover Graphic from Technology Review September 2004.


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

Appendix A: Tables and Charts
Exhibit 1: Conditions for Radical and Disruptive Innovation.

Radical Innovation
Containing one or more of the following: • An entirely new set of performance features • Improvements in known performance features of five times or greater • A significant reduction of cost of more than 30% • •

Disruptive Innovation
Initial worse product performance, but subsequent performance overshoot Lower-end market and technology which incumbents are not interested

Exhibit 2: Performance and Price Comparison of Various Operating Systems.

Exhibit 3: Operating Systems Worldwide Paid Licenses Market Share Chart.


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

Exhibit 4: Operating Systems Unit Market Share.

Exhibit 5: Current Point of Disruption of Linux OS.


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

Appendix B: Linux Distributions Releases Timeline


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

Appendix C: Summary of Major and Popular Linux Distributions
Community-Based Distribution Name Slackware Creator (Year) Patrick Volkerding (1992) Description Slackware is the oldest surviving GNU/Linux distribution. It is very secure, stable and it is often recommended for server installations, but there are no graphical front-ends configuration tools. System administrators usually say that Slackware is the most UnixLike GNU/Linux distribution. This is one of the oldest GNU/Linux distributions. The Debian project is non-commercial and gathers more than a thousand developers throughout the world. Debian is known for its strong adherence to the Unix and free software philosophies, its stability and its huge community. Debian is a distribution of choice for servers. Gentoo comes from the idea of adding the FreeBSD autobuild feature, "ports" into GNU/Linux. Gentoo is a source-distribution, where its packages are source packages and meant to be compiled on the user's computer in order to get the best performance and speed out of the resulting compiled binary software. Due to the nature of source package distribution, new software releases are quick, resulting in highly up-to-date distribution. On the other hand, the installation is long and tedious, even with a fast processor. Knoppix is a live-CD distribution, where users can run it directly from the CD without having to install it on the hard drive. Using an efficient compression mechanism, the Knoppix CD features a huge selection of software. Knoppix also provides automatic hardware detection. The CD can be used as a recovery or administration tool, as a Linux demonstration, as a hardware test tool or even as a full GNU/Linux desktop distribution.


Ian Murdock (1993)


Daniel Robbins (2002)


Klaus Knopper (2003)


Centre of Management of Science & Technology MT5002 Management of Industrial R&D

Commercial-Based Distribution Name Company Description Red Hat was founded in 1995 by Bob Young and Marc Ewing. In 2003, Red Hat decided to focus on business and stopped releasing its public distribution. The company chose to sponsor a community driven project called Fedora. Red Hat Linux 9 was the last version in the Red Hat product line and was replaced by Fedora Core. This distribution is quite unique and mixes leading edge features and conservatism. Efforts were also made to make it attractive to the public through the Fedora graphical configuration and administration tools. Mandriva’s distro was originally called Mandrake and created by Gael Duval in 1998. Mandriva is based on Red Hat. Mandriva is popular for its efficient and powerful graphical installer. The default Gnome desktop environment was replaced by KDE and some good looking configuration tools were added. Mandriva is highly up-to-date is considered best distribution for people who are new to Linux. Suse has always been seen as a distribution of choice for desktop installations. Professional attention is made to make Suse pleasant to the eyes and a serious choice for professional desktops. SUSE Linux Enterprise Server (SLES) and SUSE Linux Enterprise Desktop (SLED) are Novell's branded version of SUSE targeted at corporate environments. The OpenSuse is available in retail version (containing propriety components) and free open-source version. The distro quickly became the most popular and famous of all distributions in 2004. Based on the "Unstable" branch of Debian, Ubuntu features a fast release cycle, up to date and numerous packages, fast download mirrors, great documentation and even free shipment of CDs. Ubuntu aims to be an innovative and dynamic general purpose distribution which tackles issues that were not addressed by other distributions. Since its creation, Ubuntu has been the most popular GNU/Linux distribution.


Red Hat


Mandriva (formed from the merger of Mandrakesoft, Lycoris, and Conectiva)


Novell (acquired in 2003)


Canonical Ltd (sponsor)


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