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Some price-sensitive small and midsize businesses are turning to Linux and other open-source products as a lower-cost alternative to Microsoft's ubiquitous business software, Jupiter Research finds in a recent study.

Surveying several hundred businesses of fewer than 1000 employees, Jupiter reports that 19 percent are using some form of Linux on their desktop computers. Six percent say they use OpenOffice.org, an open-source suite of productivity applications. An additional 3 percent report they plan to deploy it in their next fiscal year, according to Joe Wilcox, a Jupiter Research senior analyst.

Price Wars?

The sticker shock associated with Microsoft products and the increasing ease of accessing open-source software are leading small-business owners to try products like the free OpenOffice.org and Red Hat's Linux distribution, Wilcox says.

Small businesses often buy their software at retail outlets, and when Red Hat's Linux distribution is on sale next to the latest version of Microsoft's Windows operating system for a quarter of the cost, the price difference can lead thrifty shoppers to test the cheaper option, he notes.

"At the very smallest end of the market, the buying pattern of businesses is very similar to that of consumers. They're more willing to experiment," he says. "They're very price-conscious, and the (logistical) impact of bringing Linux into a company with three employees or five employees is pretty minimal compared to bringing it to an enterprise with thousands of employees."

Eyeing Market

Still, Microsoft is hoping to win more sales among small and midsize businesses. Besides the price challenge, Microsoft also faces obstacles in the way the company is perceived. In Jupiter's survey, 52 percent of those polled say Microsoft is focused mainly on its own interests, with just 4 percent saying the company is focused on customer interests.

"Small businesses don't feel that Microsoft is addressing their needs. When you look at the fragmentation of the market, they may also be telling Microsoft the same thing in their buying," Wilcox says.

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