Turbolinux is laying off people in advance of their merger with LinuxCare.  SuSE has laid off most of their US staff, moving technical support and other services from the US to Europe, leaving only the sales force in this country.  Depending on your view point, the Linux shake-out has begun, or is continuing.  I expect the consolidations to continue, at least in the US.  At the same time, the Linux community seems to be fragmenting along geographical boundaries.  Red Hat appears to be the major distribution in the US.  In Europe, SuSE is the the dominant version, and Turbolinux is dominant in Japan.  The other distributions (Mandrake, Debian, Slackware, Corel, etc.) are still around, but appear to be losing market share.

I expect two things to happen.  First, the major distributions will continue to differentiate themselves and fragment further.  This will eventually lead to serious incompatibilities between the major versions, due to different kernel versions and installation defaults.  At some point in the not-too-distant future, binary compatibility between major distributions may be impossible, rather than just difficult as it is now.

The second thing I expect to happen is more of a hope.  Some enterprising company will fork the kernel, and concentrate on creating a distribution aimed entirely at the desktop market.  This will undoubtedly piss off a large portion of the Linux community, and will result in many hard core Linux zealots treating the new distribution (and the company that creates it) worse than they treat Windows and Microsoft.  Not that it will matter.  A company that can create a real, usable desktop Linux distribution will easily overtake Apple, and give Microsoft some serious competition.  Of course, that enterprising company could very well be Microsoft, especially if the company is broken up.  Wouldn’t that be an interesting turn of events?