The Cost of Ubuntu Page 2

Monday Nov 26th 2012 by Bruce Byfield
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It seems unlikely that the Ubuntu desktop will ever turn a profit.

Can Ubuntu Linux ever pay for itself? The conventional wisdom is that it can't, because no distribution has done so in the past. However, that doesn't stop Canonical, Ubuntu's commercial arm, from trying hard. At the very least, Canonical is trying to defray as much of the cost as possible.

Canonical is not a publicly traded company and does not release any financial figures. The company is quick to announce distribution deals, but the value of those deals are noticeably absent from many of its news releases. Ask its public relations directly for such information, and you are told that it is "confidential." Nor is this lack of information surprising, since, from a traditional business perspective, Canonical has nothing to gain from transparency.

Under these conditions, all answers to such questions must remain speculative. Furthermore, the answers can vary widely, depending on the assumptions made.

All the same, some guesses can be pieced together that have a good chance of being somewhere on the playing field, even if they are not in contact with the ball.

Those Who Refuse to Learn from History

History suggests that making Ubuntu self-sustaining is impossible. Traditionally, it is services and support contracts that have supported companies that produce distributions. The history of Linux is littered with distributions that have tried to pay for themselves, and every single one of them has failed. They include Corel, Linspire, Mandrake, Progeny, Stormix, and SuSE -- and those are only the first that come to mind.

Not that Ubuntu is strictly comparable to any of these commercial predecessors. For one thing, it is more polished than any of them, although some were considered polished for their time.

For another, unlike many of its predecessors, Ubuntu has never tried to sell a box packaged for stores. With all these examples of how not to, Ubuntu has generally avoided such obvious mistakes.

Instead, Canonical has tried to emulate -- at least intermittently -- successful distributions like Red Hat, whose success is built on services rather than software. From the variety of Canonical's announcements, it is still trying to find the combination of offerings that will lead to success, but its circumstances are not strictly comparable to any of these previous distributions.

All the same, Canonical never seems to have completely abandoned the idea of making at least some money from the desktop. From time to time, it announces pre-load deals, and its desktop is becoming crowded with services intended to appeal to the desktop user. Those services include Ubuntu One's cloud services, its music store, and the controversial addition of Amazon search results. Similarly, the Ubuntu download page recently added a donation page that must be clicked through before the download begins.

The income from all these desktop services is even more unknown that the total cost of making a distribution. Some of these services are too new to have any track record, and Canonical releases results for none of them.

However, the fact that others keep being added suggests that Canonical has yet to break even. My own admittedly unsupported guess is that a large percentage users have little interest in such services, if only because those who might use them are already using other services.

For instance, if you are already using iTunes, what can the Ubuntu music store offer that you don't already have? Not greater selection or consistently lower prices. It may be better integrated into the desktop, but if users have become accustomed to accessing iTunes through their Web browser, they have probably stopped noticing any inconvenience long ago.

Another reason for thinking that income from the desktop remains small is that Ubuntu has not always looked for new services wisely. Only last year, headlines were made when Ubuntu tried to take all the affiliate revenue derived from users of the Banshee music player buying from online stores, rather than leaving it for Banshee's developers. This cash grab could have simply been evidence of inexperience, but it might also suggest a certain desperation.

Some of these suggestions are probably erroneous. All the same, once you start thinking, you can hardly avoid the conclusion that releasing two versions of a distribution every year results in tremendous overhead for Canonical, and that extraordinary efforts are needed to reduce that overhead to any degree.

Searching for the Bottom Line

The difficulty of estimating the cost of a Ubuntu release without any information from Canonical is shown by the differences in the calculations of how much a release would cost if made from scratch.

In 2007, Wayne Richardson calculated that, if a Ubuntu release was made from scratch, then the cost would be just over 7 billion dollars. (By contrast, the same method applied to Debian by James E. Bromberger in 2012 came up with a figure of $19.1 billion, but Debian carries more packages and supports more architectures than Ubuntu.) However, commenters on his figures came up with estimates of $250 and $350 million. All these estimates would require an additional 10-12 percent to bring them up to date, but such great variations can hardly be reconciled.

At any rate, all these figures would need adjustments for the fact that Ubuntu is not made from scratch. Ubuntu receives most of its software from Debian, which in return receives them from upstream projects such as the Linux kernel or LibreOffice. What remains is general coordination, such as packaging and checking dependencies and installation scripts, at least some of which is done by volunteer members of the Ubuntu community.

Unfortunately, it is impossible to estimate how much is saved because of upstream and volunteer efforts, so these estimates -- which were made to prove a different point than mine -- take us no further.

Fortunately, other approaches are more promising. The About page of the Canonical website notes that the company has "over 500 staff." Since the figures are approximate, we might as well round them down to make them as conservative as possible, so let's assume 500 employees, each with an average salary of $70,000. These figures would put Canonical's labor costs at $35 million per year. Half that for Ubuntu's twice yearly release, and each release might be said to cost about $17.5 million.

However, not all of Canonical's staff are directly engaged in producing Ubuntu's releases. Some are involved in sales, marketing, administration and business development. But how many?

In 2010, Ubuntu Community Leader Jono Bacon mentioned that Ubuntu employed about 70 developers. Add an arbitrary fifty percent to that figure to take in non-coding contributions to a release, such as documentation, localization and artwork, and the salary bill is about $7.3 million a year. Half that, and each release carries a price tag of $3.65 million for development.

This figure is high enough by itself. Yet in addition to the usual responsibilities of assembling a distribution, for at least three years, a special Design Team has been working on general branding and the Unity interface. This design team was said in 2009 to consist of 14 people, "who comprise a mix of different disciplines: visual/graphics designers, interaction designers and technical people."

Many members of the design team are consultants, so they probably earn more than average staffers at Canonical. However, even using the same salary average as everyone else, the 14 members of the design team (assuming their numbers have remained constant) must cost at least $525,000 per release -- a 14 percent addition to the total. This cost might be justified as necessary to give Ubuntu a distinct identity and interface, but is a considerable addition to the cost of a release.

On top of salaries, Canonical also has infrastructure costs. The company has also been consistently generous over the years about paying for employees and community volunteers to attend conferences and assisting projects that fit its plans. However, information about those expenses is completely unavailable.

The best that can be done is to add another arbitrary estimate to the salary figures. The result? An estimate of $3.8-4.2 million for each Ubuntu release.

Or to put the cost in terms of one of Ubuntu's desktop services, to make a release pay for itself, Canonical would have to sell over 200,000 music CDs to break, even if it received the full profit on each one. But of course, Canonical only has an affiliate deal to stock its store, so the number of necessary sales would be actually be several times higher.

Assuming that these figures have any validity (and they may not), then not only can no single desktop service pay for Ubuntu's development cost, but not all of the desktop services combined.

The figures are nowhere near close enough for Canonical to have any reasonable chance of making Ubuntu profitable by itself. The most it can do is to defray the costs to whatever extent is possible -- which, most likely, isn't much. If as much as 15-20 percent of the development costs were defrayed, then Ubuntu would be doing extraordinarily well.

The Silence of the Newsroom

The strongest confirmation of the situation is also the simplest: Canonical has yet to announce profitability.

In fact, although many of the desktop services are recent, it has yet to make any public statement about their successes.

For that matter, so do its affiliate partners. Amazon.com, for instance, did not even bother to mention the partnership with Ubuntu in its news releases. Amazon's news releases have been known to mention individual book titles, but they don't mention Ubuntu. That suggests that Amazon has yet to derive any significant income from its association with Ubuntu and has little immediate expectation of doing so.

It is possible, but unlikely, that any successes in these areas are being kept quiet. Having been eight years in business, Canonical is at the point where it needs to show a profit to retain credibility. Being known as profitable could only improve the company's reputation in the corporate world.

In the same way, a resounding success for a desktop service would be a first. It would open up the idea of an operating system as a new distribution channel for entertainment services. Just as importantly, even if Canonical remained unprofitable, such a success would improve its image. Not talking about it would be tactically unsound.

Canonical may still struggle to profitability. For the last few years, it seems to have been opting for a shotgun approach to its business model, trying a variety of approaches, options and features without relying too much on any one option.

Yet although Canonical has taken commercialization of the Linux desktop further than any other company, it appears to have been no more successful than its predecessors.

In fact, when Canonical's founder, Mark Shuttleworth, stepped down as CEO to focus on his interest in usability, he may have repeated the mistake of previous distributions and allowed Canonical to be distracted by the desktop. Instead of developing Unity, perhaps Canonical would be closer to profitability if it had spent the last three years developing a line of commercial services rather than focusing on branding and usability.

The Linux desktop has been a dead end for countless companies in the past. Ubuntu has probably been more successful than any other company that has invested heavily in the desktop, but so far, there is no reason to think it is an exception. Eventually, that might change, but even that seems debatable.

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