Desktop Linux thinks small

The report, released Monday by The Yankee Group, says Linux has minimal presence among business with 500 employees or fewer, with not even 1 percent of such companies currently using Linux on desktop PCs.

That will change, however, as companies replace aging equipment running outdated software. Three percent to 5 percent of small businesses surveyed expect to have the majority of their PCs running Linux within the next six to 12 months, according to the report. The portion grows to 4 percent to 10 percent when looking at plans for a year from now, according to the report, with businesses having 20 or fewer employees showing the most enthusiasm for Linux.

While Microsoft's Windows still rules the market, the report finds small businesses are sticking with older versions of the operating system. Only 46 percent of businesses have migrated to the current Windows XP, according to the report, with 25 percent still using Windows 98 and 2 percent still plugging away with Windows 95.

Small businesses "always look to extend the life of their assets and get frustrated with being forced to upgrade to comply with a product lifecycle determined by the vendor," the report states, adding that Microsoft's recent decision to extend support periods for older products has helped boost confidence in the software giant.

The majority of businesses using older versions of Windows plan to upgrade to XP within the next 12 months, however. Seventy percent of such small businesses plan to make the switch, but the portion drops to 57 percent for business with 20 or fewer employees.

"Pay attention to the less-than-20-employees market segment," the report advises technology companies, "because that is where the early Linux-versus-Windows desktop wars will play out. The very-small-business segment shows the greatest interest in Linux desktop adoption in the next 12 or more months...Historically, the low end of the (small business) market is most cost conscious, and many will opt for a lower-cost alternative after weighing the price-to-value risk."

Besides being more price-sensitive, such extra-small businesses generally have much simpler technology needs, allowing them to switch to Linux without the integration headaches bigger companies would face, said Yankee Group analyst Helen Chan. "For a small company that may not need to use a whole lot of applications, the tradeoff is minimal," Chan said. "They don't depend too much on applications to run their organizations, so the Linux applications that are readily available will probably suit their needs."

An earlier Yankee reported showed growing support for Linux on servers.