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openSUSE:Strategy - Understand the industry
Proposals: Home for developer · Mobile and cloud ready distribution · Base for derivatives · The #1 KDE distribution · For the productive poweruser · The Linux distribution platform · Status Quo, and quantified so · Overview of proposals
- 1 Direct rivalry
- 2 New entrants
- 3 Substitutes
- 4 Pricing power of customers
- 4.1 What is a "customer" of the project?
- 4.2 How many users does openSUSE have?
- 4.3 Turning customers to suppliers
- 4.4 Customer groups
- 4.5 Why customers choose openSUSE OS instead of other unpaid Linux?
- 4.6 Why customer choose openSUSE OS instead of other paid OSes?
- 4.7 Why customer choose other OSes Linux instead of openSUSE?
- 4.8 Characterization of customers
- 4.9 What keeps users at openSUSE OS?
- 4.10 Sources:
- 5 Pricing power of suppliers
We defined our industry as "Operating Systems" while having a look at "Community Building". We identified Microsoft, Apple and other Linux at highest priority - let's have a closer look (this is just brainstorming input on questions Kurt raised earlier) and prioritize rivalry:
- Product: Microsoft Windows
- Market Share: 91.58% as of March 2010 (Source http://tinyurl.com/y6kqk9t)
- Trend: decreasing by -1.5% over 12 Months
- Desktop Market Share: Estimates vary from 85.69% to 93.76%
- Netbook Market Share: 68% of shipped netbooks in 2009 (ABI)
- Server Market Share: 41.29% (Netcraft Survey), (Source: http://en.wikipedia.org/wiki/Usage_share_of_operating_systems)
- In cognition of customers, MS Windows is the de facto standard in Operating systems. It's used by almost everyone, everyone is aware of it and a rather small group is even aware of alternatives. It's easy-to-use, it's compatible with commonly used Hard- and Software, it fits the common needs of customers (they're not interested in further functionality). It's highly advertised to customers by supplying OEM, i.e. the common user just uses what the device ships with and does not care any longer about the Operating system. Their (main) target group is the common unexperienced end user. They address a wide variety of customers' needs, from entertainment, home usage to business.
- Microsoft is continuing to dominate the desktop market, though possibly losing some market share to Apple.
- The company's primary competition on the desktop is still itself. Microsoft was not greatly successful in convincing users to switch away from Windows XP to Windows Vista. The Windows 7 launch has been better received and the company is seeing a faster uptake of Windows 7 than it had of Windows Vista.
- Microsoft is facing strong competition from Apple for some market segments. The company is also competing against Linux for client computing, primarily on the netbook where Linux pioneered the market and provides a better experience in some cases than Windows 7.
- The company's brand is not viewed as positively as it once was, but it still enjoys a double advantage of market inertia and the lock-in effect. Even though Windows 7 requires some application upgrades, new hardware or hardware upgrades, and a substantial licensing fee, the bulk of applications on the market are written for Windows.
- The learning curve to switch from Windows XP or Vista to Windows 7 is not as steep as switching to another OS entirely. Even though many customers lack enthusiasm for Windows, it is the familiar OS. Non-expert users remain "loyal" to Windows in many cases due to fear of the unknown, a desire to avoid having to re-learn how to use their computer, and/or reluctance to invest time and money in learning and acquiring new applications.
- Microsoft also enjoys a dominant relationship with Original Equipment Manufacturers (OEMs), and has a direct channel to users. Most users never install their own operating system.
- On the innovation front, Microsoft tends to focus on innovation primarily in areas where it sees competitive advantage or necessity. It often copies features and ideas from other platforms, but due to its market size and penetration, customers may not recognize that it actually lags behind competitors.
- Microsoft is ubiquitious -- it serves markets from single users to major enterprises, handheld devices to enterprise servers.
- An interesting note: Microsoft Windows is the only major operating system that has no Unix heritage whatsoever.
- Product: Mac OS X
- Desktop Market Share: Estimates vary from 3.66% to 10.97%
- Netbook Market Share: None
- Server Market Share: Unknown, but negligible, (Source: http://en.wikipedia.org/wiki/Usage_share_of_operating_systems)
- Apple has enjoyed several years of growth with major success from its desktop products and mobile products.
- The company's primary competition is Microsoft, though one might argue that early in the development of OS X that Apple also targeted -- and won -- the *nix user and developer crowd to a large extent.
- Apple's brand is very strong, and tends to be polarizing. The company has been successful with its Mac vs. PC advertising, but fights the image that it is too expensive.
- The brand does carry a price premium. However, with that comes a reputation that things "just work." Because Apple controls the hardware (and to a large extent, developer ecosystem) the user experience "out of the box" is unsurpassed. Apple sells its own hardware, and the user escapes the negative experience of a bunch of crapware on the brand new computer when it's set up.
- Apple is quite different from Windows, and does take some getting used to if users are switching. However, this is often mitigated by two factors:
- Mac OS X is arguably superior and easier to use than Windows.
- The lock-in factor with Apple is enormous. Once you've acquired an Apple computer, you're committed. As you continue to use a Mac, you acquire more and more software that is only suited for the Mac. With Mac OS X one doesn't even have the option of using a tool like CrossOver or VMware to run applications on another platform.
- Apple is its own OEM, so the relationship there is obviously well-established and exclusive.
- Apple is an innovator. The company has a reputation as an innovator, and frequently is first to market with many desktop features. Even when the company is not first to market or first to announce (see, for instance, desktop search) it has a reputation that allows it to be seen as first. But the company genuinely does deliver innovation, and if Linux vendors or projects are setting goals in usability, etc., Apple -- not Microsoft -- is the one to beat.
- The Apple application ecosystem is healthy, though not as deep or broad as Microsoft's. However, Mac OS X enjoys a fairly deep roster of applications and many of the "major" applications like Microsoft Office, the Adobe Suite, etc. are ported to Mac OS X as well as Windows.
- At the moment, Apple has no share of the netbook space -- unless you count the iPhone / iPod touch -- and has consistently plans to enter the market. However, rumors persist that the company has plans to introduce a "tablet" or similar device that would be competitive in this space. If Apple chooses to do this, it has potential to be enormously disruptive as its asset in the iPhone OS is well-suited to this type of device and it has an enormous application store and developer community.
- If Apple's story is to give Linux any hope, it's this: at the start of the decade, Apple was seen as an also-ran on the desktop and it enjoyed few of the advantages it does today. The brand was weak, the application ecosystem was anemic, and the market share was abysmal. Apple accomplished a "second act" with Mac OS X that may be unique in the computing industry.
- They actually sell lifestyle rather than a plain technical product. Their (main) target group is from my perspective the Sinus Groups AB1, B12, C12, C2 - sorry, I found no English translation of this yet. (according to the German Sinus-Milieu-Model http://de.wikipedia.org/wiki/Sinus-Milieu, )
- Product: Ubuntu, Fedora, Debian, openSUSE, etc.
- Desktop Market Share: Overall, estimates put Linux at 0.40% to 1.8%
- Netbook Market Share: 32% of shipped netbooks in 2009 (ABI Reserach, http://tinyurl.com/yl5jn87)
- Server Market Share: 38.48% (Netcraft, http://news.netcraft.com/ssl-sample-report/CMatch/osdv_all), (Source: http://en.wikipedia.org/wiki/Usage_share_of_operating_systems)
- Linux is extremely healthy on the server, doing well in embedded devices, and has continually failed to seize more than 2% of the traditional desktop market.
- Because the Linux market is so fragmented, it faces a number of problems when trying to encourage application vendors and developers to target Linux as a platform. While open source developers traditionally treat Linux as a first-class citizen (though Microsoft is encroaching slightly, very slightly, here) commercial developers do not.
- Linux lacks awareness in the overall market, and suffers from a lack of a unifying brand. Consumers tend to find Linux confusing not only on the technology side but also the "story" behind Linux. Traditional OS vendors are committed to a single OS and OSes are brought forth by single vendors. The concept of an OS with many "flavors" is seen as confusing and introduces hesitation in the "buyer." Not only do they face having to switch operating systems, they have to choose which operating system to switch to.
- On the marketing front, Linux -- even the combined strength of all projects and vendors -- is out gunned. Microsoft and Apple spend billions of dollars per quarter on advertising on television, radio, and in print. They have massive developer marketing campaigns and resources to support OEMs looking to support their respective operating systems.
- The learning curve to switch to Linux ranges from moderate to steep, depending on the distribution and the user. Non-expert users tend to remain loyal to their platform of choice. When users do try Linux, it's often in conjunction (dual boot, live CD) with their existing OS and often remain part-time users or switch back to their original OS full-time.
- No studies have been done on this, but it's probably accurate to say that of users who try Linux, less than 25% switch completely. There is a high opportunity cost of switching and a low cost to move away from Linux unless one has been on the platform for some time.
- Linux shines in the areas of software freedom, choice, and quality.
- Innovation - Linux almost has a dual-personality here. In some areas, Linux continues to play catch-up with the other OS and application vendors. Particularly in the area of applications, Linux lags behind proprietary platforms and apps. However, when it comes to innovation on the 'base' level of the operating system and tools, Linux shines. The most popular desktops have shown great innovation and have features that are very cutting edge. The same is true with virtualization, software management, etc. However, in many cases, these innovations do not add up to "killer" features that consumers demand.
- Application choice is both rich and limited for Linux. On the server side, Linux is at par or ahead of Windows and Mac OS X in many cases, and holds its own against UNIX. (We're not examining UNIX here, though if we delve deeply into server as opposed to desktop we should.)
- On the desktop, most basic use cases are covered -- though it is typically more complicated to accomplish some tasks such as multimedia management and playback due to patent problems. Advanced use cases such as art production/pre-press, CAD, and any use case that requires advanced application software typically won't be satisfied with Linux -- with some exceptions. The movie industry, for instance, has developed rich "home-grown" tools around Linux and continues to utilize Linux extensively. (Unfortunately, those tools iterate on a near-daily basis and are typically not released to the public.)
- Mobile devices are becoming more and more popular and grow a huge market with software for them. The thread with mobile devices is becoming convinient with the product and a growing acceptance of the product itself and the vendor of the product. In this way a solution for a bigger machine (Desktop,Notebook...) becomes a more obvious choice for the customer already owning a mobile device of the vendor. This also includes compatibility with the mobile device, a mobile device sold by one vendor is more likely to be able to work with this vendors other product solutions.
- Newly released hardware is mostly supported on a small subset of available operating systems and that will influence a decision which one to use. Hardware vendors normally don't talk about their upcoming hardware, so they are the only party that can provide device drivers. To cut on development costs, drivers are mostly done for mainstream operating systems. With hardware support in mind the question of the operating system selection is a question of hardware compatibility.
Everything we don't know
- The big threat in the new entrants area is actually everything we don't see or know about. A company coming up with a new shiny product that is working out of the box and has a quickly growing community around it is one of the biggest problems we will be facing in the new entrants area. The big threat in this is, that everybody can see what we are working on, with open processes and open source code, but an upcoming product from some company can only be identified when it comes to market.
- The big challenge in our field with new entrants is that we are quite unfelxible to react on certain activities within a short time frame. A company coming up with a new product interesting for our field might know about certain things we are working on, but we are not aware of things that happen behind closed doors in some companies.
A distribution consists of the operating system plus applications. As possible substitutes for an operating system we see:
- Cloud computing offers ressources and machine power in the internet. Cloud computing still needs an operating system but importannce declines.
- Here the operating systems still is needed but it is there just as a commodity. People building an appliances as they need a certain application (database, file server) and the operating system just needs to be there.
Functionality moves into smaller devices
- Functionality moves into smaller devices for which openSUSE doesn’t offer an operating system (ARM, Simbian, Android). In former years for many functions (email, procutivity suite, browser) a PC was needed. Nowadays it often can be handled by smaller devices (cell, smart phone, netbook)
Operating System becomes commodity
- We don’t see real substitutes for operating systems in general but its obvious that the importance/value of an operating system is decreasing and therefore its hard to differentiate through the operating system. An operating system today is just a standard things and especially in the Linux circus there are countless ones available. Further the top five or so are all of similar high quality and therefore you literally can exchange one with the other if needed. We see areas (devices) which are able to handle workloads today and need an operating system such as openSUSE but while progressing they will need customized operating systems which openSUSE doesn’t offer today.
Some more findings in our discussion
- an OS meanwhile is hook for other services by a vendor (eg. Android or CromeOS for other Google Services, OSX, iPhone for App Shop). openSUSE’s challenge here is, that we a) have few other services and b) don’t sell them so a possibility for income is missing
- openSUSE at least need to work seamlessly with those newly evolving devices (data exchange, services, applications)
- openSUSE might be the toolkit or SDK for such small devices
Pricing power of customers
- Better understand our customers - what do they need, expect, suffer?
- why do they use our product at all?
- what problem do we solve for them?
- what different groups/segments do exist? - trends/changes?
- What are we bad at?
What is a "customer" of the project?
- customers = user of the project
- suppliers = contributors
- contributors are both customers and suppliers.
Btw. being part of the openSUSE project means contributing - not only using.
For openSUSE we do not have paying customers. What do we want from customers?
- attention - they honor us in using openSUSE
When we gain users, those are not only a target to become contributors themselves, but their existence also motivates others to contribute
Note that looking at a strategy implies looking at what customers we address with it. The data in this document looks mainly at existing customers, if we want to grow we have to look at potential new customer groups as well.
How many users does openSUSE have?
We estimate to have 1.4 million installations per openSUSE release so that gives an approximation on the number of users.
The openSUSE Build Service has 20.000 users.
Turning customers to suppliers
- 90% of users are the “audience”, or lurkers. The people tend to read or observe, but don’t actively contribute.
- 9% of users are “editors”, sometimes modifying content or adding to an existing thread, but rarely create content from scratch.
- 1% of users are “creators”, driving large amounts of the social group’s activity. More often than not, these people are driving a vast percentage of the site’s new content, threads, and activity.
The above percentages come from online communities and might be different for openSUSE as development project - but they are a good rule of thumb.
For this it's a necessity to have open processes - processes that are easy to get in and to contribute to. It needs to be obvious where help is needed and easy for someone to participate. openSUSE right now needs to lower the bar further for contributors.
Differentiation by "product":
- customers of distribution/operating system
- customers of Build Service
- any other relevant product?
Differentiation by usage
- Build Service:
- user - downloads packages
- Media/Distribution developer
- desktop usage
- application development
- web serving/hosting
- email server
- networking server
- file and print server
- systems management
- scientific/engineering applications
- development - operating system, tools
- home server (file server)
- test/pilot usage
Differentiation by "Industry"
- open source developers
- open source enthusiasts
- users - who just want an OS and apps which fullfill their needs
- web hoster
- companies - variety of industries, small and large
- Build Service
- open source packager
- upstream open source developers
- ISVs/IHVs with hosted Build Service
Why customers choose openSUSE OS instead of other unpaid Linux?
They want a stable ready to use product, which simply works and does magic :). Important is a system with easy configuration and options to change but preconfigured such that most people do not need to configure at all.
- Technical features:
- integration quality
- Tools around:
- Build Service
- SUSE Studio
- Contribution friendliness
- Available documentation/FAQs
- friends that use it
- Relationship to other products:
- Novell products
Why customer choose openSUSE OS instead of other paid OSes?
- Have in-house expertise that is adequate
- No licensing or subscription issues to worry about
- Don't need support from a commercial provider
- Workload beeing supported is not critical
- Frustration with existing solution
- Linux in general is more flexible than Windows
Why customer choose other OSes Linux instead of openSUSE?
What is considered as bad by our customers?
- Usage of RPM (instead of apt)
- short lifetime
- "yast is crap"
- "SUSE is slow"
Characterization of customers
From openSUSE 11.0 survey:
- 60 % in age group 20 to 39
- 98 % male
- 2 % female
- computer expertise
- 37 % experienced user without technical skills: you do updates and configure your computer as you like
- 32 % professional knowledge
- 25 % experienced user with technical skills
- 5 % basic knowledge
- 25 % student pupil
- 17 % system administrator
- 16 % developer
- 13 % office worker
- Internet connection
- 92 % Broadband/DSL
- 0.6% without internet
- Other OS usage
- 50 % use Windows in addition
- 19 % use other Linux in addition
- Usage of openSUSE
- 64 % only personal usage
- 2 % only commercial usage
- 34 % both personal and commercial
- desktop usage
- 95 % Internet access, e-mail, chat
- 75 % office tasks
- 75 % watch movies, listen to music
- no feedback on application development
- used by 54 % of users
- 38 % file or print server
- 50 % of users do development
- 32% application/GUI development
- 30% web development/server development
- Criteria that openSUSE fulfills according to users:
- Amount and selection of software
- Ease of installation
- Ease of administration
- Hardware support
- multimedia support
- Criteria that openSUSE not fulfills according to users:
- none of those that were asked
What keeps users at openSUSE OS?
- switching costs between distributions
- IDC Non-Paid Unix/Linux survey 2007 (on server usage)
- openSUSE 11.0 user survey
Pricing power of suppliers
(Example for substitutes might be that software development/usage might cease to be interesting to communities and be replaced by online gaming or whatever — just making up things …)
Do we have analyst data to look at?