Unix-inspired systems have traditionally often had the letter X in their name, e.g.: UNIX itself (ex Unics), Irix, AIX, Minix, NeXTStep, Xenix, HP/UX, Linux, Mac OS X in no particular order.

Of course not all do, e.g. Free/Open/NetBSD (though they were originally based on "BSD UNIX"), Solaris/SunOS, etc.

With that "should end in X" idea in mind, Linus chose to name it Freax (because it was a /free/ UNIX).

When he uploaded a very early version to an FTP server at Helsinki, his friend, who administered the server, changed the directory name from "freax" to "linux", thinking the latter was a much better name. Linus at first thought it would be too egotistical to name it that, but he let the name stick. I'm glad he did.