Mark Shuttleworth, who founded Canonical in 2004, told his employees, "I can make it two years on my own." Shuttleworth's intention in saying this was for his employees not to be overly concerned about the company's performance, but to take it easy and focus their efforts on the newly developed Ubuntu operating system. He asked employees to take away the joy of a first taste of market success, not to let their guard down, and to focus on Ubuntu, a company that has never made a profit, but has never given up. Shuttleworth has always hoped that Canonical would be able to stand on its own two feet, and he has no intention of leaving it even if it loses money. "Although I said at the beginning that it was okay to rely on me for two years, I didn't say that I would make money in two years. What I said should have been 'You can rely on me for these two years.' I want to find the path of Ubuntu to success and the point of disruption of the Ubuntu operating system in the market.'" Nine years later, however, Canonical's books are still in the red. According to estimates, Shuttleworth is currently worth $500 million, which came from the 1999 sale of VeriSign Digital Certificates. To this day, Canonical is still burning through Shuttleworth's hard-earned money. Even without mobile, the desktop market would be dead. To this day, Shuttleworth has not required Canonical employees to make a profit. In fact, in addition to the increasing operating costs of the desktop and server markets, the mobile market has been a major drain on the bottom line, Shuttleworth said, adding that "the desktop market is dying on its own" and that the mobile market has been successful because it has catered to the trend toward privatized computing. Shuttleworth's original goal was to compete with Microsoft in the desktop market with a Linux-based operating system. To date, however, Microsoft's Windows operating system has 93 percent of the total desktop operating system market share, while the Linux operating system has 1 percent of the market share. With numbers like these, it's not surprising that Canonical isn't making any money. What is strange, however, is that Shuttleworth has given up specializing in the commercial market and has chosen to attack the personal computing market by revolutionizing end-user computing. Anyone who knows the Ubuntu operating system knows it's free, and Canonical, the company that develops it, has a reputation for server software, as well as an OpenStack cloud infrastructure based on Ubuntu that's free to all major data centers. For the uninitiated, it's easy for Canonical to make money by abandoning the desktop and mobile markets and focusing on the datacenter," Shuttleworth said. "It's so easy for Canonical to make money by just focusing on the server market or making OpenStack. A company with one or two products is small enough to be profitable." Making money, however, is not what Shuttleworth has in mind; Shuttleworth is a true believer in open source software, and he wants it to be open source from computers, to cell phones, to tablets, to servers, and finally to the cloud. "In my eyes, open source is becoming more and more ripe for opportunity, and that's where my interests lie. I like disruption, segmentation, and there's a point in the future where you open up your phone and run an Ubuntu app and project it onto a big screen, at which point the phone is an Ubuntu computer, and the computation of the data will take place on Ubuntu's cloud computer. Now I don't want to sound presumptuous, but the time is really getting ripe. It certainly makes more sense for me to invest in so many products than in one." Canonical is headquartered in the United Kingdom and employs more than 500 people in 30 countries around the world. Because Canonical is a private company, its financial results aren't public, and we don't have access to the company's quarterly earnings. In 2009, Canonical generated $30 million in revenue, which Shuttleworth claims is enough for Canonical to be self-sufficient. According to DueDil, a financial information service, Canonical reported annual revenue of $54.2 million in March 2012, with a net loss of $10.55 million, a spokesman for Canonical said, adding that this was a U.K. figure and not a global one. While users can download the Ubuntu desktop and server operating systems for free, there are a number of ways that Canonical makes money. Organizations that use the Ubuntu desktop operating system and need technical support and copyright protection can ask Canonical for help for a fee. In addition, computer manufacturers who want to pre-install the Ubuntu operating system on new computers pay Canonical to develop customized versions of the operating system to ensure hardware and software compatibility. The Chinese government has also asked Canonical to develop a customized version of Ubuntu to bypass the expensive Windows operating system. Home users generally don't pay Canonical, but Canonical has a deal with Amazon to display ads on its desktop systems, which could bring in a lot of revenue for Canonical. Shuttleworth didn't say whether the desktop market is profitable or not, saying only that "the desktop market is clearly not going to be very profitable. It's clear that the desktop market is not going to be very profitable. The desktop market and the server market are equally important to us." "Ubuntu's market share in the US is not representative of the world. This year, one of Dell, HP and Lenovo produced 20 percent of their computers with the Ubuntu operating system pre-installed, another will do 20 percent next year, and a third will soon do so." Canonical, which doesn't disclose the order of the three because of a confidentiality agreement, makes a lot of money from its server and cloud businesses, and makes money from selling Ubuntu Server and technical support for OpenStack. Canonical also sells Landscape, an Ubuntu control system that helps organizations manage the Ubuntu family of products, although Landscape is not open source software. In addition, Canonical makes money by renting out Ubuntu cloud servers, which are available to everyone for a fee (see below for prices.) Shuttleworth says, "Ubuntu is free, but it costs money to run the cloud servers." Amazon and other cloud server vendors are making a fortune off of cloud servers, and Canonical must be making a lot of money too. "It's our goal to have Ubuntu on all cloud servers, and currently Ubuntu is number one on the list of Linux servers on Microsoft's Azure cloud servers, and Ubuntu is still number one on Amazon's cloud servers." Microsoft and Amazon see Ubuntu as a client operating system, but in fact Ubuntu can also be used as a host operating system, with companies such as AT&T, Deutsche Telekom, NTT, China Mobile, Ericsson, and Rackspace using Ubuntu and OpenStack as an IaaS (architecture as a service). In fact, OpenStack is an open source project developed by Rackspace in collaboration with NASA, and is not exclusive to Canonical. OpenStack is not exclusive to Canonical, except that the OpenStack cloud is built on the Ubuntu operating system, which is used by default, and there are currently 22 million Ubuntu users around the world, the vast majority of whom are desktop users. OpenStack has only been available for a short time, but a number of large organizations have already chosen to use OpenStack, such as CERN, which controls the LHC. Most of the OpenStack clouds currently in operation are simulations, not paid-for use, Shuttleworth says: "But half a dozen of the world's top telecoms operators are using OpenStack, and the fact that they're paying to use it is going to drive more people to use it." Coincidentally, these are the same companies that will help him promote the Ubuntu mobile operating system. Canonical plans to enter the mobile market in full force with the launch of the Ubuntu Touch phone and tablet. To minimize the financial strain on the company, Canonical has launched a $32 million crowdfunding project, Ubuntu Edge, on a crowdfunding platform. $32 million is nothing for Shuttleworth, and he's using the crowdfunding platform to test the market's response. As of now, the crowdfunding project is sure to fail. Even if it does, Shuttleworth has every reason to keep chasing the Ubuntu phone and tablet dream. "I believe we have the strength to pull this off." Ubuntu phones and tablets won't hit the market next year because consumers continue to prefer Apple and Android phones, and Canonical doesn't plan to take the ad-dependent approach to monetizing Google's Android operating system; it wants to make money by selling hardware and carrier contracts, with 11 major telecom carriers interested in partnering with Canonical. Eleven major telecom carriers are already interested in partnering with Canonical to sell Ubuntu phones, and Shuttleworth expects Ubuntu phones to have a 20 percent market share, and thinks developers who have developed Android apps on Ubuntu will be eager to develop apps for Ubuntu phones. Shuttleworth has said that Ubuntu phones are an extension of the Ubuntu desktop operating system because they use the same system code, just with a different user interface. You can think of Ubuntu phones as small-screen Ubuntu computers. However, the Ubuntu mobile operating system is still in the process of development, the Nexus 4 phone can already run a trial version, the basic functions are running normally. Looking at Microsoft and then BlackBerry, can Ubuntu beat iOS and Android in the mobile OS market? It's still too early to tell, as the real thing hasn't even been released yet. But as we all know, the mobile market isn't Canonical's only leverage, its server and cloud businesses are very influential in the Linux OS space, and Ubuntu's servers aren't as influential as Red Hat's. Analyst Al Gillen of IDC, a research firm, tracking server revenues globally said, "Ubuntu's server business is not as influential as Red Hat's," after tracking server revenues worldwide. Profits from Ubuntu's server business are probably a fraction of Red Hat's more than $1 billion in annual revenue." Gillen said, "Ubuntu's server revenues probably aren't in the billion dollar range right now, they're in the tens of millions of dollars a year at best. We don't think Ubuntu's server OS has a very high impact, and it's not even reported separately in our statements." Gillen was surprised to hear Shuttleworth say that Canonical could be self-sufficient with just its server and cloud businesses, "We're surprised that it's profitable with just two product lines. If Canonical can really be profitable with two open source products, that's amazing." Ubuntu is the only choice for users when using OpenStack, but if they want to use other servers, they have to use Red Hat's operating system. In this regard, Ubuntu is not very competitive. At Red Hat's annual conference in June of this year, Red Hat released its own OpenStack solution, so the future of Ubuntu in the cloud server market is not optimistic. Because Red Hat has already established a strong foothold in the market and has a large number of partner companies, the market will continue to choose Red Hat over Ubuntu, so Red Hat's involvement in OpenStack will surely wipe out Canonical's early sense of success. Red Hat has been working on OpenStack since last year, appointing 100 employees to work on OpenStack compatibility issues with Red Hat, which has updated its OpenStack codebase so that all Linux operating systems can run OpenStack cloud architectures, and which has been admired by Shuttleworth, who said, "Red Hat's work solves the OpenStack cloud problem. Red Hat's work solves the problem of OpenStack having to work with Ubuntu." At the same time, Red Hat's market share advantage helps it earn more consulting and maintenance fees on open source OpenStack, says Stevens, Red Hat's director of technology: "The biggest difference between Red Hat and Ubuntu is that our technical people know every line of OpenStack code. Ubuntu is a great operating system that brings free technology to the enterprise, but doesn't generate services and value. The software is free, and promoting the product doesn't bring value; the value exists in the customer relationship." The game started with Shuttleworth rebutting Stevens' statement that OpenStack under Ubuntu supports virtualized operating systems such as VMware, KVM, Xen, and so on, whereas Red Hat's only supports KVM, and Shuttleworth mentioned that Red Hat also uses a cloud-init virtual machine technology invented by Canonical. Shuttleworth also mentioned that Red Hat also uses Canonical's cloud-init virtual machine technology. We're not going to be Microsoft, and we're not going to be Red Hat," Shuttleworth said. "Canonical is more of a developmental, technology-based company," Shuttleworth said, adding that "Canonical will continue to maintain good relationships with its major customers, server manufacturers, processor manufacturers, and provide best-in-class services to organizations. good relationships to deliver best-in-class cloud infrastructure to the enterprise." Chasing the desktop, enterprise and mobile markets is, Shuttleworth says, "like chasing a rainbow. But Canonical isn't eager to curry favor with world-class players to make money, instead focusing on technology development and making a little money in its own little world. We're not going to be Microsoft, and we're not going to be Red Hat," he said.