Ubuntu's breakout
Ubuntu has largely succeeded where many others have not in emerging as a major global Linux distribution.
Ubuntu and Canonical, the Mark Shuttleworth-founded commercial entity that supports it, have done something that seemed improbable a few years back. They've emerged as a third Linux distribution to have commercial market momentum on a worldwide basis. Prior to Ubuntu, the distribution landscape consisted of commercial and community-supported versions from Red Hat and Novell's Suse--together with some regional and "flavor of the month" distros. (See my "The Scene at the Distro" from April 2006.)
Canonical and Shuttleworth have managed to make Ubuntu into a third commercial Linux distribution that's here to stay; "Intrepid Ibex," Ubuntu 8.10, is the latest release and will be available this week. In one sense, Ubuntu simply represents the commercialization of Debian, an aggressively noncommercial Linux flavor that was long the long-favored distro of the self-identified techno-elite. However, Ubuntu distinguishes itself from Debian by its willingness to include proprietary components when open-source ones aren't available. This is especially important on the desktop (for example, codecs required for certain kinds of media support). Ubuntu has also received all manner of usability and "fit and finish" upgrades that make it far more consumable than the notoriously difficult-to-install-and-configure Debian.
At the same time, Canonical distinguishes itself from Red Hat and Novell in that it offers a single product (in desktop and server flavors); it does not have "enterprise" and "community" versions that are effectively separate distributions. The advantage (for customers) of this approach is that they can deploy Ubuntu for free and then, without changing the "bits," simply start paying for support when they go into full-scale production.
The downside (for Canonical) is that they have to persuade users to actually buy support. Historically, getting a high enough "conversion rate" with this business model has been difficult for open-source companies. Indeed, this was essentially Red Hat's initial model, abandoned in favor of having a separate Red Hat Enterprise Linux version. In general, proprietary software or services factor into a lot of the revenue that companies make around open source.
Viable long-term business models are no small thing, of course. Although Canonical now has a respectable number of paying customers such as Wikimedia, Mark Shuttleworth (who founded security firm Thawte and sold it to Verisign in 1999) continues to support the company to a significant degree. Supposedly, at some point, Canonical has to become self-supporting. (Although Shuttleworth has said that he has no objections to funding the business for three to five years.) And low cost, which is a big part of Canonical's Ubuntu pitch against Red Hat, also means that it's harder to make money.
That (big) caveat aside, however, Canonical has established a legitimate worldwide presence as a Linux supplier for businesses. It's had wins on servers and Ubuntu has emerged as pretty much the de facto desktop and notebook Linux choice for developers. That's no small feat given how many others have tried--and largely failed--to do so.