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Microsoft still rules server OS market

Despite growing competition from Linux, Microsoft continues to dominate the market for server operating systems software, according to research from IDC.

Despite growing competition from Linux, Microsoft continues to dominate the market for server operating systems software, according to research from IDC.

And the software potentate looks secure to retain its lead in the worldwide market for server operating systems through 2007, Framingham, Mass.-based IDC reported Wednesday. During that period, shipments of both Microsoft's Windows and the open-source Linux are projected to see higher annual shipments, with the overall market for server operating systems expected to grow at a rate of 9.1 percent per year. In comparison, the market for client operating systems is projected to grow 7.5 percent annually.

Looking back, shipments of Microsoft's server operating systems grew from 50.5 percent of the market in 2001 to 55.1 percent last year, while shipments of its client operating systems increased from 93.2 percent to 93.8 percent worldwide. During the same period, shipments of Linux system software for servers grew to 23.1 percent of the market, with shipments of Linux-based client operating systems accounting for 2.8 percent of the sector in 2002.

IDC analyst Al Gillen said Microsoft has defied downward market trends by shifting its product lines and its licensing policies, but indicated that the company would likely find it hard to continue to outpace sales of Intel-based server hardware.

"It's probably unrealistic to expect Microsoft to continue to drive the market as hard as it has been," said Gillen.

Despite IDC's conclusion that 2002 was a rocky year for overall IT spending, shipments of operating systems and related subsystems showed some resilience, growing by 4.3 percent to $18.6 billion. The increase was led by a 12.4 percent increase for Windows. Aside from the Microsoft operating system and Linux-based systems, all other products showed losses last year.

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The solid performance of server operating system software based on Linux bodes well for the market in the future, Gillen said.

"Given that the market has been brutal to everyone but Linux and Windows, especially Unix operating systems," he said, "I think this could serve as a good indicator of potential long-term success for Linux."

Of the 5.7 million new licenses for server operating systems recorded last year, 99 percent were for Windows, Linux, Unix (11 percent) and Netware (9.9 percent) systems. In the client sector, Windows, Linux, and Apple Computer's Mac OS (2.9 percent) accounted for 99.5 percent of total shipments of 121 million units.

Gillen believes that one of the defining trends of the server operating system segment over the next few years will be consolidation in the Unix market. The analyst is predicting movement toward servers running on Intel architecture with five or so "more basic flavors" of Unix surviving the shakeout.