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:

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.

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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