A profitable Linux Desktop distro?

From a purely (short-term) revenue generating perspective, you might not call non-paying consumers progress and in fact from that perspective, they might be considered a loss but there are certain concrete benefits towards having them in the longer term. It wouldn't make sense for say Red Hat to fund Fedora otherwise. OpenSUSE is available commercially but I don't think it is self sustaining enough on its own for justifying the continued investment from Novell. Both these projects are benefiting from the investment made from revenue generated by their commercial off shoot products and the fact that the organizations themselves are profitable.

There is a value in building a brand by giving your product freely but just because you have a popular brand doesn't mean that you will be commercially profitable. Red Hat learned that lesson with Red Hat Linux years back and Canonical which is essentially following the Red Hat Linux model is learning that as well but even for distributions (or any commercial open source project for that matter) which are currently commercially profitable, there is always a free to pay conversion challenge.

When the commercial services are optional, it makes the challenge higher but the market has grown significantly since the Red Hat Linux days and it is certainly possible that the growth of Red Hat, Novell and other vendors makes it easier to do it now than before assuming you can find way to compete with the existing vendors and offer better value to some of your users enough to convince them to buy your commercial services.

Adam from Mandriva pointed out in his blog at http://www.happyassassin.net/2008/10/28/why-i-dont-like-c... that Canonical is somewhat in a unique position in the market being privately funded but Canonical also appears to be of the understanding that desktop is a gateway to making a business on the server side rather than being profitable by itself. The lack of significant investment in upstream projects even on the desktop side might be a result of this understanding.

So, it remains a open question if any of the current vendors believe they they can become profitable or even self sustaining by being just desktop focussed or ultimately if they can. It will be the answer to that question, that determines the commercial market share of Linux on the desktop.

It should be pointed out that Mandriva has made considerable contributions (http://www.kroah.com/log/linux/lpc_2008_keynote.html) towards various upstream projects despite their current financial status.