Everyone agrees that Wayland is better than X11 for your usual desktop. Why is X then used by every major distro? Is it bugs, little compatibility from apps (is that even an issue?) or something else?
closed as primarily opinion-based by Thomas Dickey, Jeff Schaller♦, sam, G-Man, Raphael Ahrens Jul 7 '16 at 7:38
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I think you've jumped the gun a bit — while many people may agree Wayland has a better design for the modern era (though some still disagree even on that), the implementation is not yet finished, and it doesn't yet do everything needed to overtake X, nor are the applications and toolkits ready for it. This fall Wayland is expected to declare its API stable so that the toolkits can start porting without having to worry about incompatible changes breaking their port, while the Wayland developers continue working on the bits still needed to flesh out the desktop.
The lead developer of Wayland gave a talk and demo at the X.Org Developer's Conference in September 2012 covering the current state and work in progress still - you can either read the summary or watch the video recording.
Note: My information may be out of date. I know there already are a lot of Wayland libs in Ubuntu.
Wayland is still relatively new and it's a long way from well tested and complete. Several distributions are migrating towards Wayland and we will most likely see Wayland based distributions next year.
X has been used for decades and there are a lot of old applications who require X to run. There are a lot of applications to be ported before a distribution can fully take the step over to Wayland.
X needs to be ported to run as a application under Wayland, then can we use X as a compatibility layer for old applications.
It's really just a matter of project maturity. At the time of the original question, Wayland support from GUI toolkits (eg. Qt, GTK, etc) was still in development, and support from DM's (GDM, KWin, etc) was also limited. As such, everything still used X11 and Xorg.
But this has changed. As of this writing, Gnome 3.20 has strong Wayland support, as do numerous GUI toolkits. Over time, I think you'll find that most distros will likely default to the compositor used by the respective DE (eg. GDM), thereby using the Wayland protocol.