Open-source adoption faces extra obstacles in China

The uphill battle that open-source programs face to steal ground from proprietary software comes with added pitfalls in China, where problems like software piracy take away strengths that open source has elsewhere.

The Chinese government backs multiple domestic open-source projects, but their software is not widely used. Low awareness, a lack of big open-source projects and difficulty finding expertise in certain programming languages all hamper the development of open source in China, observers and advocates say.

China also has had few instances of large commercial organizations switching to Linux or other open-source software, said Matthew Cheung, a Gartner Inc. analyst.

"It is still limited to government agencies and the education sector," Cheung said. "People are just hearing a lot but can't see the real reference cases in China."

China wants to cultivate its own industry giants in software, including in open source. Beijing supports the sector by using open-source software in many of its own offices and channeling research funds to domestic companies like Red Flag Software, the top local Linux vendor.

Red Flag Software has closed many government deals. China's postal service and the Postal Savings Bank of China run tens of thousands of servers with Red Flag Linux, Jia Dong, CEO of Red Flag Software, said in an interview. The huge state-run news agency, Xinhua, is among the other users of the company's Linux distribution.

China's Linux market is growing as the operating system finds its way onto netbooks and more servers. Research firm IDC forecasts a 22.8% compound annual growth rate for revenue in the market over the next five years.

But Linux and other open-source software programs face even more roadblocks to adoption in China than they do in countries with more developed economies, where problems like the logistics of migrating an entire company's systems from proprietary software to open source can make such projects unrealistic.

The biggest reason Chinese companies do not choose open-source programs may be rampant software piracy. Pirated copies of Windows and Microsoft Word, openly sold at Chinese electronics markets, are used on countless PCs in both offices and homes.

China's software piracy rate has declined for several years but was still 80% in 2008, according to a study by IDC and the Business Software Alliance.

The fact that it's possible to get a copy of Windows at just about no cost means companies can't save money by switching to Linux as they would in the U.S. or Europe, said Frederic Muller, an organizer of the Beijing Linux User Group.

That eliminates what would otherwise be a major incentive encouraging companies to switch to open source, said Muller.

"In China, even the closed software is free," he said.

Business is also more difficult for open-source companies without government backing to guarantee big deals.

FiveDash, an open-source accounting software outfit, has hesitated to release a Chinese version of its program even though the company's coding base is in China, said Shannon Roy, CEO of the company.

The usual open-source business model of giving away software and then selling related services does not work as well in China as it does elsewhere, said Roy. Low-cost labor makes it cheaper for many smaller companies simply to keep their own technical support staff rather than paying for outside services, he said.

Low awareness and the absence of a major backer among Chinese IT companies mar China's open-source landscape as well, said James Bai, Sun Microsystems Inc.'s chief officer of the Open Community in China.

That contrasts with the U.S., where companies like IBM and Intel contribute broadly to open-source projects, said Bai.

China does have open-source vendors besides Red Flag Software, including Linux distributor China Standard Software Company (CS2C) and RedFlag2000 Software, maker of an office suite called Red Office. But those companies have not inspired the growth of open-source communities and are not seen as innovative.

Red Office is based on OpenOffice. And some have speculated that Red Flag is just copied from Red Hat's Linux distribution, given the fact that the two programs have similar boot-up processes and release cycles, said Cheung, the Gartner analyst.

"Certainly we can't find concrete evidence to prove that, but it seems to us in the market that they are not leading the open-source initiative," Cheung said.

Linux server software accounted for about 3% of China's market for server operating systems last year, said Cheung. But that number is based on revenue, and since the cost of Linux is so low, it's likely that the proportion of servers that shipped with the operating system was higher. Linux accounted for an even smaller portion of the revenue in China's market for client operating systems -- about 0.5%.

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