Linux in the Red

When Danny Ho returns from a short lunch on a blistery winter day in the Pudong district of Shanghai, China, he throws down layers of clothing on the floor and shakes the mouse on his workstation. In a moment, a GNOME login window pops up. After a few keystrokes, Ho, a bank manager, is staring at a Linux desktop and dozens of new emails waiting to be opened.Linux is quickly becoming a familiar sight on desktops across China, where many influences have led the government to strongly push Linux as its preferred operating system. As the country experiences the longest economic boom in its five thousand year history, its technology sector is heeding the government’s call for Chinese-developed software on Chinese flavors of Linux.As one of the fastest growing PC markets in the world, China plays an influential role in determining Linux’s future.

Strength and Influence in Numbers

To understand the influence of China, simply look at itsstrength in numbers. With over 1.3 billion citizens eager to enjoyeveryday luxuries, such as cars, computers, and entertainment,Chinese consumers hold enormous potential and wield enormous power.While the old stereotypes of rice paddies and small villages arestill commonplace in the Chinese countryside, the scene in thecountry’s many large cities differs dramatically. High-risebuildings, new developments of housing compounds, and miles of carsstretched bumper to bumper reflect the country’spotential.

Indeed, according to the Chinese government, China’s grossdomestic( GDP) has increased 7-9 percent year-over-year for thepast ten years. China now ranks as the world’s second largestconsumer of oil, quickly closing in on the United States. To feedhungry construction, China has catapulted to the number oneimporter of steel and iron, with no end in sight.

As China’s population prospers, they desire what’snow called “the three C’s”: cell phones, cars,and computers. Over the last decade, China has grown into theworld’s second largest market for PCs — a hugepotential market for Linux. While PC manufacturers in the U.S. facepressure from Microsoft to avoid Linux, the Chinese arms of thevery same companies are free to load Linux with carte blanche.

For example, HP sells its Pavilion desktops in Chinawith a choice of Windows or Linux. Random checks atelectronic stores in Beijing show a basic Linux Pavilion sellingfor$ 60 less than the Windows XP version. Silent aboutLinux at home, Dell announced last year that it had certified itsbusiness laptops and desktops to work with Red Flag Linux.Domestic PC vendor, Lenovo, also touts Linux on its PCs andservers.

Red Flag for Redmond

But the boom in computer sales has also led to an explosion ofsoftware piracy. The Business Software Alliance estimates thatpirated software accounts for 95 percent of all software in China— a country where a worker’s average annual income is$1,000.

Up until recently, that rampant software piracy has largely goneunpunished. But as a result of joining the World TradeOrganization( WTO) and adopting new rules targeting piracy, theChinese economy is now faced with potentially massive licensingexpenses running into the billions — a grave financialliability that could up-end Chinese prosperity. As a result,Beijing is eager to sever its reliance on Microsoft and otherforeign products, and is strongly investing in its domesticsoftware industry.

One example is Red Flag Linux. Backed by the son of formerChinese President Jiang Zemin, the company, established in June2000, packages its own distribution of Linux. Wildly popular on thedesktop, it lags behind Japan’s Turbo Linux on theserver, but Red Flag has signed partnership agreements with HP,Oracle, and domestic hardware companies to expand its server marketshare.

Foreign companies have been eager to dive into the Chinese Linuxmarket, too, with some success. HP, Dell, and IBM are major“Tier 1” hardware vendors that widely support Linux inChina. Oracle, BEA, and Red Hat are among other software companiesthat have recently entered the China market to tout Linuxproducts.

Security is another factor accelerating Linux in China.

In 1999, a Canadian cryptographer found a feature in Windowscalled an NSAKey. This fueled speculation over whetherMicrosoft software contains a back-door loophole that could beoperated by the National Security Agency, which gathersintelligence for the U.S. government from around the world. ThoughMicrosoft vehemently claimed the key was harmless, the discoveryleft many in the Chinese government suspicious and eager to relaxthe dominance of Microsoft on government computers. In the springof 2000, an editorial in the People’s Liberation ArmyDaily, one of the official mouthpieces of the government,summed up the sentiment in Beijing. “Without informationsecurity, there is no national security in politics, economics, andmilitary affairs,” the article declared.

In 2003, China’s governing body, the State Council, setpolicy that all government ministries buy only locally-producedsoftware, such as Linux, at the next upgrade cycle. The move waslargely due to Beijing’s desire to control the software andoperating systems running on government systems.

The Great Wall That’s China

While Microsoft is far from finished in China, it faces anuphill battle with a determined government that’s doing itsbest to promote Linux as a domestic alternative to Windows. Despiteits best efforts, Microsoft is quickly becoming unpopular withinChina, as it resorts to legal action to combat piracy. It hasreceived hostile responses from the local media when suing Chinesecompanies over the sale of pirated software.

In one such case, Microsoft was seeking$ 200,000 in damages, butlost the case when the court ruled that it had sued the wrongcompany. While Microsoft doesn’t disclose its financialperformance in China, Beijing tech industry analyst Huang Yongestimates that the company is not profitable on yearly revenue of$200 million to$ 300 million in the country. With$ 30 billion incash, however, and a long track record of success, Microsoft issure to put up a fight to dominate China. The outcome of that willbe determined by the delicacy of its actions.

Linux users groups( LUG) have sprouted up across the country,usually around university campuses. Visiting one of these meetingsis very similar to one that you’d find in the U.S. or Europe:experienced users doling out advice to new users, and an organizedchaos of wires and computers laid out on tables and floors in smallmeeting rooms.

The question of which Linux distribution has the most popularityin China is hard to answer due to the free downloads that manyusers take advantage of. A quick unscientific survey at LUGmeetings in Shanghai and Beijing found that Fedora was thepreferred distribution of end users, followed by Red Flag andMiracle Linux. “It doesn’t matter what we use,as long as it’s Linux and we control what goes into oursoftware,” says a LUG attendee Xiang Zhouyun, while helping anew user install Fedora Core 3.

The Populist Penguin

The Chinese government has spent much of the last decade tryingto build its own software industry, without much success. Now,Linux and open source provides it a golden opportunity to developits fledgling domestic software industry into a powerhouse. With anarmy of volunteer programmers, Linux is the new vehicle forsuccess.

By adopting Linux, China offers its people an alternative toMicrosoft that’s developed natively and is much more secure.With over a billion potential users in China, this market will beLinux’s most strategic battleground to conquer. The questionisn’t if, but when.

Tim Lee is founder of Pogo Linux, a Linux server andstorage hardware manufacturer based strategically in Redmond, WA.In 2004, Pogo Linux opened a new division in Shanghai, China tocater to the greater Chinese market.

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