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The Yin and Yang of Open Source Commerce - page 3

Introduction

  • November 1, 2005
  • By John Terpstra

It seems logical at the outset that if we can quantify the demographics and the size of the potential global market, certain market segments will appear to be more financially attractive than others. Where shall we turn to obtain pertinent current information regarding the global market place?

First, we must recognize that market statistics are like a coroners' report, they are a post mortem of a snapshot in time. The statistics look back on what may have been, has changed, and are unlikely to be accurate as predictive tools. Often times statistical information is two or three years old before it is published. Timeliness of data is critical to its utility--thus we must look for sources that are fresh even if they lack completeness. More complete data is likely to be more out of date, and thus not as useful.

Second, macro-economic trends and characteristics are generally useful to help identify markets that should be avoided. These seldom point to a latent opportunity.

Third, insider market knowledge can point to particular aspects of the opportunity spectrum that the outsider is unlikely to be attuned to, and thus may miss.

While we seek to understand the global picture we must content ourselves with projections. Advanced market statistics are available for economically mature countries, but only sparse information is available for lesser developed countries. The most detailed industrial profile is available for the USA. This can serve as the reference, or datum point to obtain a bigger picture assessment.

The Bureau of Census is a good source for basic information regarding the size and profile of the US market, as shown in Table 1.

Table 1: US Business Distribution by Size--1988 and 2002
AREADATA TYPETOTAL<2020-99100-599500+
United States 1988Firms4.954,6454,444,463430,64066,70812,824
Establishments6,016,3674,516,707581,622244,697673,341
Employment87,844,30318,319,64216,833,70212,761,37939,929,580
United States 2002Firms5,697,7595,090,331508,24982,33416,845
Establishments7,200,7705,147,526692,775332,5081,027,961
Employment112,400,65420,583,37119,874,06915,908,85256,034,362
Source

The next challenge is to identify the relationship between the US domestic market and the nature of the global market. Our objective is not to be totally quantitative, but rather to gain an insight into the nature of the market globally. The CIA web site proves to be useful in this quest (see Table 2).

Table 2: Global GDP for 2004 (Est)
AREAUS$Percentage
Total55,500,000,000,000
US11,800,000,000,00021%
EU11,700,000,000,00021%
China7,260,000,000,00013%
Japan3,750,000,000,0007%
India3,320,000,000,0006%
Rest of World17,800,000,000,00032%
Source

Based on this information, we may conclude that the US domestic market is approximately one fifth the size of the global market. We must take account of the degree of maturity of the US market compared with that of lesser developed countries. It may be concluded that the number of businesses globally is likely to be between 3 to 5 times the US numbers. The factors chosen (shown in Table 3) are based on estimates of how representative the US market demographics are of the global average. It is understood that there are a greater proportion of large businesses in the US market than there are in less mature markets.

Table 3: The Global Server Market
Company Size# Employees/CompanyAverage Users/ServerUS Number (2002)Global FactorGlobal Number# Servers% of Total Servers% of Companies
500+35004516,845350,0353,930,5007.67%0.18%
100-4991421082,3344329,3364,676,5719.13%1.16%
20-993910508,24952,541,2459,910,85619.34%8.96%
<20975,090,331525,451,65532,723,55663.86%89.70%
Total5,697,75928,372,77151,241,483100.00%100.00%

The Netcraft web server survey reports that as of October 24, 2005, there were 74.4 million publicly accessible web servers globally. The ISC Internet Domain Survey, July 2005, reports that there are 353.3 million hostnames in the public DNS today. As if this is not confusing enough, World Internet Usage and Population Statistics for September 2005 lay claim to 957.8 million Internet users globally (see Table 4). There are some clear gaps between the various statistics and the methods by which these have been obtained--it is beyond our scope to reconcile these. Even so, they demonstrate that the market is large, while at the same time making it clear that since only 14% of the world population is currently a consumer there is considerable growth potential. That potential is largely in the SMB/SME market segments--not in the enterprise space that has so far been at the core of market development activities by the present Linux businesses.

Table 4: World Internet Usage and Population Statistics
World RegionsPopulation (2005 Est.)Population % of WorldInternet Usage, Latest DataUsage Growth 2000-2005% Population (Penetration)World Users %
Africa896,721,87414.0%23,867,500428.7%2.7%2.5%
Asia3,622,994,13056.4%327,066,713186.1%9.0%34.2%
Europe731,018,52311.4%273,262,955165.1%37.4%28.5%
Middle East260,814,1794.1%21,422,500305.4%8.2%2.2%
North America328,387,0595.1%223,779,183107.0%68.1%23.4%
Latin America/Caribbean546,723,5098.5%70,699,084291.3%12.9%7.4%
Oceana/Australia33,443,4480.5%17,644,737131.7%52.8%1.8%
World Total6,420,102,722100.0%957,753,672165.3%14.9%100.0%
Source

So far we have begun to examine the global IT market in a bid to better understand the potential for IT products and services. Our assumption is that any OSS or Linux business initiative will be under pressure to achieve financial viability quickly. This means that the most opportune market must be targeted with appropriate business solutions.

Up to this point we have started to see how many potential business consumers there might be and how many potential individual consumers there may be.

These statistics demonstrate that the market is huge, but we also know that innovation and creation of the right solutions package to each market will take great skill and dexterity.

Now we will the focus will be identifying the size of the market for server products.

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