System76: Ubuntu PC Maker’s Revenue Up 61 Percent
Even before Ubuntu 9.04 arrives April 23, System76 has reason to celebrate. The PC maker — which specializes in Ubuntu systems — grew its first quarter 2009 revenue more than 60 percent compared to 1Q 2008, according to System76 President Carl Richell (pictured). But Richell isn’t resting on his laurels. He’s making sure System76 is ready to catch the Ubuntu 9.04 wave — from servers to netbooks. Here’s how.
When Ubuntu 9.04 debuts April 23, System76 will offer the operating system on desktops, laptops, and servers. Actual product shipments with Ubuntu 9.04 pre-loads start the following week, according to Richell.
His exact words:
Beyond the latest and greatest open source software, Ubuntu 9.04 dramatically increases [that is, speeds up] boot time, features a slick new notification system, and easy integration with Active Directory networks. Additionally, laptop users benefit from improved external monitor support.
While most major PC makers don’t yet pre-load Ubuntu on servers, Richell sees significant ongoing opportunity for System76 in the Ubuntu server sector.
Ubuntu 9.04 Server drives closer to enabling its broad deployment in small and medium businesses. With Ubuntu 9.04 turn-key solutions, businesses can quickly and securely deploy email, file and print, web, and DNS services within their network. Ubuntu 9.04 Server also easily integrates into Active Directory domains – a valuable management feature for existing infrastructures.
Any other surprises on the way from System76? You bet. Richell says the company is developing its own System76 Netbook with Ubuntu Netbook Remix Edition.
It’s easy to understand Richell’s enthusiasm. I spent three months testing/using System76’s Pangolin Performance laptop and didn’t want to send it back. I still need to write a lengthy review of the system. But to cut to the chase: I loved it as an everyday general purpose laptop.
And System76’s 1Q 2009 revenue growth — 61 percent — proves that there’s growing mainstream demand for Ubuntu-oriented computers. System76 does a great job positioning Ubuntu for individuals, businesses and schools.
Now, the Challenges
But it’s important to keep all of this “positive” news in perspective. As privately held companies, neither Canonical nor System76 have to disclose their net income or profit margins — so it’s difficult to say just how much money Canonical and its PC partners can ultimately pocket.
Also, System76 is going to face increased competition from Hewlett-Packard, IBM and Dell in the Ubuntu server market. Not today, not tomorrow, but I suspect the server competition will emerge sometime in late 2009 or early 2010. And Canonical itself will need to work hard to keep the Ubuntu industry growing — and generating revenue.
The New York Times recently reported that Canonical’s annual revenue was about $30 million. That’s impressive for an open source company. But remember: Red Hat generates more than $650 million in annual revenue. And Red Hat’s revenue grew more than $130 million in 2009 — meaning that Red Hat is pulling away from Canonical even as Canonical continues to grow.
All that aside, Canonical is carving out quite a niche in the market. And so too, apparently, is System76.
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“His exact words:
Beyond the latest and greatest open source software, Ubuntu 9.04 dramatically increases boot time,”
ROFL. I know he meant the opposite of “increases”, but still funny.
Maybe he was talking about Vista?
Kidding aside, thanks for reading the piece closely. I made a small edit [ ] to clarify the statement.
Wow. Look at what you get when you treat the product as first-class citizen in website placement, hardware and customer support.
Dell & co, are you listening?
(@shamil: lol. it is indeed funny)
[...] Read more at WorksWithU [...]
[...] am I shocked at all that they are doing well and seeing their revenue go up? Not at all. Considering a company that is 100% Linux only, does much of their own engineering for [...]
This is definitely good news for System76 and Ubuntu. Now I just wish they’d focus more on aesthetics. System76’s laptops are large, cumbersome, and ugly. ZaReason is only slightly better. I’d still rather buy a Dell or Lenovo and install Ubuntu myself because of this. And that’s not saying a lot, considering that neither Dell or Lenovo are really known for aesthetics. Would it be that difficult to have a chassis that closely tightly, rather than leaving a 1/2″ gap in front and at the sides?
Josh@6: You raise a great point about ZaReason’s position in this market. I sent them an email about their 9.04 plans a few days ago. I will let you know what I hear.
Josh:
There’s no gap when I close the lid on my ZaReason UltraLapSR. It’s got a very pretty pattern worked into the lid too.
But the reason System76 & ZaReason have rather boxy laptops is that they’re both using Asus parts. ZaReason’s CEO has mentioned to me (in private correspondence) that they’re looking at other options, such as taking control of manufacturing instead of buying parts from Asus, but that’s all up in the air right now.
Is 2009 the year of the linux desktop malware?
How does Ubuntu’s Upstart system initialisation compare with runit?
A good read:
http://techunits.com/content/list_all/19/ubuntu
popurls.com // popular today…
story has entered the popular today section on popurls.com…
Yes. 32 systems is 60% more than 20 systems but the volume still sucks.
Yes. 32 systems is 60% more than 20 systems, but the volume still sucks.
This is good news – well done System76. Please sell them in Australia as neither HP nor Dell do.
Eg. Buying a Dell and installing Ubuntu on it is not an option for me because that would mean giving money to Microsoft. This doesn’t encourage OEM’s to preinstall Linux on their products and that Microsoft continues to grow. It defeats the purpose in my book.
[...] just read this, and it reminded me of my experience with System76. Congrats to them. Even before Ubuntu 9.04 [...]
@Zac:
Dell sells systems with Ubuntu preloaded. I don’t know how good their driver support is, but here they are: http://www.dell.com/ubuntu
I bought a Darter Ultra from System76, but it got to me with nonworking 3d graphics drivers. Hoping that 9.04 fixes that.
Never heard of System76.
Quite easy to grow by 76% when you are very small.
No fact and figures so maybe they sold 54 systems compared to 35 in first quarter last year.
I would very much imagine that Linux Netbook sales are down at least 76% 1st quarter this year.
“System76 is ready to catch the Ubuntu 9.04 wave — from servers to netbooks”
Aw, you had me all excited there. System76 sells a netTOP (e.g, a small DESKTOP system), but no netBOOK (a small LAPTOP).
My wife adores her Linux-based eeePC netbook, but we have to switch it to Ubuntu ourselves. I’d really prefer to get one with Ubuntu pre-installed.
[...] System76: Ubuntu PC Maker’s Revenue Up 61 Percent The New York Times recently reported that Canonical’s annual revenue was about $30 million. That’s impressive for an open source company. But remember: Red Hat generates more than $650 million in annual revenue. And Red Hat’s revenue grew more than $130 million in 2009 — meaning that Red Hat is pulling away from Canonical even as Canonical continues to grow. [...]
I do wonder about the server installations, the ones I see usually have Ubuntu LTS (or even more often Debian) installed. Not the bleeding edge (Fedora, latest Ubuntu).
[...] a bright spot in our doom-and-gloom economic news, Ubuntu-based PC maker System76 reported 61% growth in PC sales for Q1 of 2009 over Q1 of last year. And, while other manufacturers are preparing themselves for the launch of [...]
Haha the new version “increases” boot time.
The company president is one scary looking dude. Did he smoke a bag of meth before that picture was taken?
Hey Roy: Comments are welcome across our sites, but personal attacks? Not cool.
Red Hat took 15 years to get to $650M revenue, and they are the biggest FOSS OS vendor. Eight years ago, at seven years old, they were making only about $100M. Ubuntu and Canonical are almost five now. I think Canonical is on track to make that kind of money within the right time-frame.
Just because Red Hat is moving faster doesn’t mean that Canonical isn’t accelerating in the market. It’s a young company that just started trying to monetize itself.
[...] What recession? System76: Ubuntu PC Maker’s Revenue Up 61 Percent < http://www.workswithu.com/2009/04/15/…; [...]
my Wild Dog is a great machine. I’m looking forward to getting my first netbook and servers from System76 too. They deserve success for making great products!
[...] é uma empresa que viu os seus lucros aumentarem rapidamente em 61% graças a ter focado os seus serviços a distribuir equipamentos com o [...]
All Ubuntu needs to do is show that it’s the third player in the PC market. They need to get low cost PC’s into stores. Just like Ubuntu now has Dell as a vendor, they need to get one of the store brand companies to put Linux on the shelves.
People want choice other then Windows but Apple is pricy. If you had Ubuntu and it was as fun looking and safe seeming as the Mac OS but cheaper then Windows people will buy. They just need to hands on it first.
If you could get a couple of PC’s and Laptops in Best Buy etc and have some good marketing on why you should buy it over Windows, Ubuntu would sell like hot cakes!
What I find most interesting is that system76 doesn’t list Canonical’s support services on its support page:
http://system76.com/articles.php?tPath=5
Even now, when they are selling Canonical support services as part of server purchasing. That page lists Ubuntu community support…but not Canonical’s for-pay support. In fact, you can’t even purchase Canonical branded support on laptops nor desktops…just the servers. (Different from Dell, as Dell lets you buy Canonical support services for some of the Ubuntu consumer products)
Makes you wonder, does System76 have an OEM servicing contract with Canonical to provide expert support for laptop and desktop issues? Or is all of the technical support for laptop and desktop done in-house by system76 staff with no official support partnership with Canonical? Do OEMs like system76 need Canonical as a support partner or are they doing a reasonable job of it providing their own support with backup from the Ubuntu community?
-jef
What if System76 bought refurbished macs, outfitted them with Intel X-25M’s, undervolted them, replaced optical drives with extra batteries, installed Ubuntu in dual boot with OS X, and offered colemak keyboards?
My next machine was going to be a macbook white with a japanese keyboard ’cause I figured if they keys aren’t going to do what they say, they may as well look cool.
Ty@26: I think we’re two years from Linux really gaining traction in consumer retail PC stores. Yes, netbooks will gain traction first — assuming the netbooks are of quality. I think Ubuntu Netbook Remix is a real promising start.
But I don’t think any Linux is ready to compete on traditional consumer PCs in retail stores. Consumers will ask “where’s Microsoft Office.” And most don’t understand the value of OpenOffice and related free apps.
What we really need is for major PC makers to offer OpenOffice standard on some Windows systems, and to market around OpenOffice for Windows… and oh by the way, it runs on Linux too. Over time, that paves the way for consumer Linux.
Hook them with the open source applications on Windows first, then switch them to Linux.
I share your love for Ubuntu. I use it as my preferred OS, over the other dual boot of XP. I do wish Ubuntu would make Wine and running Windows on Ubuntu much easier for everyone, as none of us can entirely escape needing it now and then. Perfecting this will be the turning point to greater acceptance by the unenlightened masses.
Dave Z: Thanks for the note but I just want to be clear: I don’t “Love” Ubuntu. I think it’s a quality solution but WorksWithU is not out to advocate Ubuntu for all people. Rather, we want to cover the Ubuntu market to see how it develops/matures.
[...] pre-installed Linux options and companies dedicated to strictly providing Linux machines are posting outstanding profits. I suspect will start seeing these numbers continue to rise, that we [...]
@Dave Z
How and Why should Canonical make Wine and running Windows apps easier in Ubuntu? For one they do not program for Wine that is for the Wine devs to figure out not Canonical(ubuntu). Also what application is keeping you from converting 100%? If there is not a Linux port for such application, you cannot get it to work under Wine, then there is surely an open source alternative < Gaming.
Wine has come a long way, there are other emulation software that you can try Cedega, Cross Over Office etc. Yea they may not be FREE (as in Beer) but how many of your Windows programs are?
@Joe Panettieri
For the users that ask “where’s Microsoft Office” the answer to that is the Windows machine you purchased did not come with MS Office(Unless a Bloated Trial Version), in which case MS Office 2003 runs perfect under Wine with little to no configuration. Open Office comes bundled with most major distributions, and after trying it most users will not miss MS Office. While lacking in the Spreadsheet app, I feel it is better at Word Processing, Presentation software, and will meet most users need in spreadsheet software (If not Gnumeric is Rock solid!)
Ubuntu is not suppose to be Microsoft and should not try to be.
@Chaotic Intervention,
I think Dave Z might be one of those guys who thinks all Linux is Ubuntu. Definitely doesn’t seem aware that Canonical has no part in the WINE development.
The idea that the entire Linux world revolves around Ubuntu which seems to be rising prominently in the Ubuntu community is a frustration for a lot of non-Ubuntu people like myself. Ubuntu may be easy, but I can easily tell you as an Arch user Ubuntu is far from the *best* Linux distribution.
Now that I have that out of the way, let me go back to Canonical and WINE.
The nature of open source development is such that downstream folks have it well within their power to modify their software. In fact, both Cedega and Crossover are actually derivatives of WINE.
If Canonical seriously wanted someone to use Windows apps on Ubuntu, there’s really nothing stopping them from making a team meant specifically for WINE development in Canonical.
A great deal of open source development works that way, including the Linux kernel itself. So many companies that distribute Linux are also famous for contributing serious amounts of code back upstream. It could and probably does work this way with WINE.
Personally, though, I think a better investment would be to make sure there’s good alternatives to Windows software. And there already is for just about everything, except games. Office? OpenOffice. Photoshop? GIMP (I’ll get blasted by a lot of Photoshop users for that one, but pretty much the only features PS has that GIMP doesn’t are just used by pros.). And even a lot of apps getting increasingly popular on Windows are already there, full speed, on Linux, like Firefox.
I believe games to be quite minor, but I also think it would be nice if more of the mainstream game houses started to see Linux as a viable platform. Companies like id are long-time game developers who didn’t neglect Linux. BioWare used to develop a bit for Linux, but I think since EA bought them out I expect this trend to end. There’s been a rumor floating around Phoronix for some time now that Valve wants a piece of the Linux action. They already have Linux dedicated servers, but the rumors are around Steam and the Source engine getting ported. I wish them well.
@Yaro,
If Valve ever comes out with anything for Linux, I’ll be the first to get it. I’ve never gotten anything by Valve, and in fact I don’t particularly like their games, or any video games, but I would definitely buy it just to encourage Valve to do more for the Linux community.
Using Wine is useful, but not everything, Unfortunately, there are some proprietary programs for which there are not open-source equivalents, but if there are Linux versions of the proprietary programs, then I have much less of a problem (though I still like my software open).
If we’re going to get anyone to do anything for Linux, we’ll need to spend some money. We won’t be able to get them to give us the source or give out software for free, but it’s nice to see someone looking in our direction.
Oh, and, of course, congratulations System76. I hate using computers from Hell – I mean ‘Dell’. I expect to see more exciting things from you guys in the near future, and if you try hard, you will beat Dell and HP and Microsoft, and maybe even Apple. You have the support of every single Linux user. Microsoft and Dell and HP have no one’s support. Good Luck!
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