What Linux is actually doing now is absorbing the old line Unixes. Because it's not taking marketshare away from them. It's simply engulfing them. Engulfing their user base and their technical base. They can do that if they want.
Fragmentation happens because the source is with the pluralist.
In the Linux world, you can't play that game. We already have that. It's called Debian. At the level of application compatibility. You have to do things to make software for a StrongArm port run on Intel.