Microsoft Still Cleaning Up With Windows
Ivy Lessner
08/27/07 - 01:59 PM EDT
SAN FRANCISCO -- Whether from Linux open-source technology or virtualization, many have predicted the demise of
Microsoft's(MSFT Quote) traditional software business. So far the company that built its house on Windows isn't caving in to soothsayers.
The latest figures from consulting firms indicate that although Linux sales are growing by number of servers shipped with the operating system, the software is losing ground to Microsoft's Windows.
Microsoft picked up 2 percentage points, bringing its market share to 67.1% of servers shipped during the second quarter, according to data from Gartner. Of 2.06 million servers shipped overall, nearly 1.4 million came preloaded with proprietary OS. That works out to an extra 77,650 Microsoft-based servers sold during the quarter, year over year.
Linux accounted for 22.8% of server shipments, down from 23.1% the year before. In spite of the lost ground in market share, strong sales of servers created a bigger pie for the slight growth of commercial Linux.
According to IDC, Windows worldwide server revenue grew 18.7% to $5 billion in the second quarter. (Operating systems account for only a portion of that revenue.) The Microsoft OS gained 4 points of market share by revenue. Windows servers accounted for 38.2% of all revenue. Microsoft plans to release its Server 2008 early next year.
Compare those figures to $1.8 billion for Linux-based server revenue in the second quarter, which had 19% growth year over year, according to IDC. Linux servers now represent 13.6% of all server revenue.
One consideration possibly putting a damper on Linux is the perception that committing to open source means paying higher staffing and management costs to support it.
"In broad, sweeping, general terms, you can find a way to configure Linux cheaper than Windows, in terms of acquisition cost," says IDC analyst Al Gillen. "But that's only one cost" to the larger issue of maintaining software systems over the three- to four-year life of a server.
While Gartner and IDC don't track server operating systems by brand,
Novell(NOVL Quote) and
Red Hat(RHT Quote) have commercialized the open source software. Novell sells the SUSE Linux Enterprise Server, and Red Hat sells the Enterprise Linux Server.
Servers aside, management at
VMware(VMW Quote) have suggested that virtualization will ultimately undermine the need for big operating systems like Windows.
But virtualization may actually be helping Windows, which is more popular for virtualizing business IT networks because of its larger installed base, Gillen says.
"I don't think people make their operating system selection on a virtualization strategy," Gillen says. What is affected by virtualization is the choice of computer architecture. VMware is designed for what is called "x86" architecture. Virtualization, which allows fewer servers to function with more capabilities, changes the architecture decisions, Gillen says.
This could account for a drop in sales of Unix operating systems, which tend to be based on non-x86 architecture. Unix gave up 1.2% of market share, shipping nearly 20,000 fewer servers than the same quarter of the prior year and holding just 7.6% of the market, according to Gartner data. Both
Sun(JAVA Quote) and
IBM(IBM Quote) sell Unix-based servers. But IBM sells or supports the major operating systems,
including Linux and a proprietary OS.
IBM's mainframe servers, running its z operating system, have been on a growth trend for over a year, according to IDC. Revenue for z servers grew 4% year-over-year during the quarter, to $1.2 billion. System z accounts for 9.5% of all server revenue and was the only platform outside of Linux and Windows to see revenue growth in the quarter.
Unix took in $4.2 billion in revenue in Q2, according to IDC. By revenue, Unix had 31.7% of the server market, reflecting the higher prices that mainframes capture.
Revenue for Windows on servers first surpassed Unix in 2006, says Jean Bozman, research vice president in IDC's worldwide enterprise server group.
Just as prognosticators have predicted that Windows will be threatened by virtualization, they say the same for the server market.
"We believe that virtualization reduced the x86 server market by 4% in 2006, and by 2009 it will have a far greater impact," Gartner analyst Thomas Bittman said at that firm's Infrastructure, Operations and Data Centre Summit in Australia in May.
But IDC doesn't see it that way.
"People had been concerned that with the ... adoption of virtualization we would see a slowing" of the server market, Bozman said. "But we saw an acceleration," particularly in x86 equipment, probably due to virtualization.
"That's why we provide the x86 cut on this: It's the leading [architecture] for the server," she said.
For now, the server environment is growing from the plethora of new Web 2.0 applications, online gaming, the building of server farms by online services companies, and upgrading of data center equipment and software at corporations, Bozman says
And as long as servers sell, so do operating systems. That continues to bode well for the reigning champion from Redmond, Wash.
