Chinese Red Flag Linux Open Source OS Goes Under

Linux and open source software may still be popular with the North Korean government, but not so in mainland China. A few days ago, the leading homegrown Linux distribution in that country, Red Flag Linux, officially ended its operations after a nearly 15-year run.

First released in 2000, Red Flag Linux was developed by Red Flag Software under the oversight of the Chinese Academy of Sciences, China’s main academic body. In its early days, the distribution posed a significant threat to Microsoft (MSFT) within the Chinese market when the Chinese government ordered state ministries to replace Windows 2000 with Red Flag Linux.

Those days are long gone. Last week, citing the lack of an expected subsidy payment to support continued operations, Red Flag Linux officially went under and let all of its employees go. (It hadn’t paid them since last April.) The shuttering culminated a series of financial problems that stretched back to last spring.

Linux distributions come and go, and few people are likely to miss Red Flag. For the open source ecosystem, however, there are some lessons here. For one, this is a reminder of just how stiff the competition for open source operating systems is against well-entrenched, better-branded global competitors such as Microsoft Windows. If a Linux distribution with official government support couldn’t make it even in an environment as politically friendly as China, it does not bode well for Linux in places where government interests align more closely with those of proprietary vendors such as Microsoft and Apple (AAPL)—which, while not officially endorsed by the state, have a lot more cash to direct at political lobbying efforts than their open source competitors.

At the same time, this news is yet another reason why Linux vendors need to diversify well beyond the traditional realms of desktop and server computing. Red Flag Linux never attempted to build integrated offerings tailored to virtualized or cloud environments, for example, and it certainly didn’t make any moves toward the mobile world. Those are areas on which healthier Linux vendors, including Red Hat (RHT) and Canonical, are now focusing heavily.