February 28, 2001 12:40 PM PST

Linux growth underscores threat to Microsoft

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Microsoft still holds the lion's share of the server operating system market, but Linux shipments grew slightly faster than Windows did last year, according to a new report.

Microsoft's Windows held 41 percent of the server OS market in 2000, up from 38 percent in 1999, according Dan Kusnetzky, an analyst at market researcher IDC.

Microsoft CEO Steve Ballmer has acknowledged that Linux has become its No. 1 threat, and the IDC numbers underscore that position. Although the figures show that Windows shipments increased 20 percent, Linux outpaced it with a 24 percent increase.

Linux grabbed 27 percent market share in 2000, up from 25 percent the previous year. In 1999, Linux also was the fastest-growing server operating system.

Red Hat, Caldera Systems, Turbolinux and SuSE are the most prominent companies that sell Linux, an open-source operating system primarily used in servers.

Industrywide, shipments of server operating systems grew 13 percent to 6.1 million, Kusnetzky said.

When revenues are examined instead of shipments, however, the picture is different. IDC didn't release specific numbers, but Kusnetzky said Linux sales accounted for less than 1 percent of the total market. That's because Linux is very inexpensive.

As Windows and Linux grabbed market share, all other server operating systems lost. Unix slipped from 17 percent in 1999 to 14 percent in 2000, Kusnetzky said, while Novell NetWare slipped from 19 percent to 17 percent.

Among Unix companies, he said, Sun Microsystems "saw significant growth" with its Solaris operating system. IBM's AIX and Hewlett-Packard's HP-UX were essentially flat. And Compaq Computer's Tru64 Unix and the Santa Cruz Operation's Unix products declined in share.

"Sun was the bright spot," Kusnetzky said.

While the number of Unix shipments stayed flat, revenue increased, he said, indicating that Unix is being used on increasingly powerful machines used to substitute for larger numbers of less powerful servers.

The situation was less varied in the desktop and laptop market, where Microsoft had 92 percent of the market, IDC said. Linux, by contrast, had 1 percent and Mac OS had 4 percent.

One curiosity for the desktop market is how much Windows 3.1 still sells. Though Microsoft introduced its successor, Windows 95, in August 1995, companies with licenses for 3.1 continue to install it and send Microsoft the revenue, Kusnetzky said.

To account for Linux, IDC noted that it had to shift its methodology to accommodate the comparatively new operating system.

For example, the company has revised its 1999 Linux figures, Kusnetzky said. Fewer people used Linux on desktop computers than IDC originally calculated, he said, but some people used Linux-based machines both as workstations and servers. And because Linux was used more on servers than IDC originally predicted, the market researcher had to discount some shipments--for example, copies of Linux that were bundled with hardware such as network cards but never installed.

Shipments of operating system software differ from the shipments of servers themselves, Kusnetzky noted. One way that difference shows up is with Linux, which often is installed on ordinary PCs that are used as servers, and not on systems that are built and marketed as servers.

 

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