Open Source Market: FOSS getting hot in Russia

Recent interest towards FOSS from the Russian government has boosted commercial activity in this field. No longer than a year ago there was no single large company that would say it is capable of doing FOSS system integration projects. Now there are three, and the number will probably grow.

Nobody is particularly sure about how to do business with FOSS, but it is already evident that it can be done somehow. That is why the larger ones are jumping on the bandwagon simply not to be late.

First to come was Armada (Russian), a holding which is better known for its sibling company named RBС (Russian). It succeeded to unite in Fall 2007 the majority of the local Linux vendors, namely ALT Linux, Linux-Online (Russian), Linux Ink (Russian) and VNIINS (the latter specializes on producing operating systems for the military needs) in its bid on the project of the Ministry of Education that, if successful, could become the largest migration to FOSS in world’s secondary education.

Another participant in the same tender was a company named Korus Consulting. Although large, it has never done FOSS projects before, so its move looks to be grounded on a pure business decision. Korus’ bid was remarkable as the company was willing to do the project for 5 mln roubles only (while the official budget limit of the project and the sum concluded with RBC was 60 mln). This striking difference does not mean that Korus has found a way to cut the costs down tenfold — they announced that they viewed this project as an investment and were willing to do it with their own costs. Nevertheless, they lost to RBC. A week ago Korus announced (Russian) that it will be shipping a localized version of Asus EeePC. However, there is little original software there: the OS is a modified version of Xandros.

Finally, a recent visit of RedHat’s Jim Whitehurst last week was concluded with an OEM partnership agreement (Russian) between RedHat, IBM, Austrian VDEL and a large Russian IT company AiTi to supply Linux-based computers to Russian government. As far as I understand the layout, RedHat is going to supply software, IBM will provide its Lotus Symphony, VDEL will make hardware, and AiTi will be concluding deals and doing the system integration part.

The first company is clearly trying to build its strategy on the locally available resources. As the company has not done FOSS business before, it looks like it is going to submerge the smaller Linux developers. The strategy of the second remains somewhat unclear: a modified Xandros may be a nice start, but if they are going to attract government’s attention, they need to become or partner with a more solid and reliable software supplier. Finally, AiTi is playing as a mediator of the Western companies with most of the hardware and software built outside of Russia.

It’s getting interesting to follow the development of the events. Which strategy will be the most effective? Will there be new players, and if so, how will they differentiate their offer? Will the Russian FOSS developers be able to produce commercially-driven world-class FOSS software or will it be imported from other countries instead?

Even though it is now unclear what the Russian FOSS will be, I think that some two years will be sufficient for it to take a definite shape. We’ll see.

Technorati Tags: Russia, FOSS, market, AiTi, IBM, RedHat, VDEL, Korus Consulting, Armada, ALT Linux, Linux Ink, Linux Online, VNIINS, schools, government

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8 thoughts on “Open Source Market: FOSS getting hot in Russia

  1. “Recent interest towards FOSS from the Russian government has boosted commercial activity in this field. No longer than a year ago there was no single large company that would say it is capable of doing FOSS system integration projects.”

    This is not exactly true. At least 2 companies, the ALTlinux and ASPLinux (www.altlinux.ru, http://www.asplinux.ru), both authoring their own Linux distributions, are routinely doing “FOSS system integration projects” nation wide.

    I cannot call the effect of the government interest to FOSS a “boost”, it is more like what normally happens in Russia when “government” meets “money”.

    “Nobody is particularly sure about how to do business with FOSS, but it is already evident that it can be done somehow” is also not exactly true. Both the above mentioned companies are in business for long time and, evidently, are profitable. And they are not alone. LinuxCenter (www.linuxcenter.ru) is more like an online Linux store. It is in business happily for many years and now collects preorders for EeePC with Mandriva Linux 2008 Powerpack, also nation wide.

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  3. Andrey,

    I am a proud member of ALT Linux (for 5+ years), and I think that I understand what you mean. Both ALT Linux and ASP have proven to be sustainable, but they have not solved one problem yet — it is that of the size and reliability. Both companies remain small businesses, and large companies and government agencies (which bring most of the money on the market) seldom trust the small ones.

    If the FOSS wants to flourish in Russia — it will have to grow in size. There might be several different ways to handle this growth, and I really wish that the Russian FOSS developers find the right one. I know the ALT Linux Team well enough, and taking their optimism and dedication into account, I have all the reasons to count on them to surpass this transition period.

    However, the situation is very rough now, and we can hardly tell what ALT Linux or ASP Linux will be in three years.

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