Linux boosts server OS market

Sales of Intel-based servers slow down in 1998, although sales of operating systems for these machines are growing faster because of Linux.

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Stephen Shankland
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Sales growth for Intel-based servers slowed down in 1998, although sales of operating systems for these machines grew faster because of the growing popularity of Linux.

Sales of PC servers--the mid- to low-end machines utilizing Intel chips--grew 8 percent worldwide, a much slower growth rate than the 42 percent of 1997 and the 50 percent of 1996, said an International Data Corporation study released today. But server operating systems, the core software used by the computers, grew by 25 percent in 1998 compared to 15 percent in 1997.

1999 should be a better year for PC servers, boosted by Intel's relatively new Xeon chip and a recovering Japanese market. "In 1999, IDC expects an aggressive rebound to double-digit growth in worldwide PC server factory revenue," the market research firm said.

In operating system growth, Linux shipments leapt 212.5 percent from 1997 to 1998, a major component of the 25 percent overall server operating system growth. With Linux taken out of the equation, the server operating system market would have grown only 11 percent, IDC said.

Microsoft Windows NT Server shipments grew 27 percent to 1.56 million units, IDC said, and the product should post higher scores for reliability, availability, and serviceability, and become easier to use in companies with Unix and Novell NetWare.

During 1999, information technology specialists will focus on making sure systems are year 2000-compliant instead of rolling out new server operating systems, IDC predicted.

PC servers: Compaq rules the roost
Compaq Computer was the top PC server vendor in 1998, with 29 percent market share and revenues of $3.8 billion. This success comes despite "distractions" of the merger with Digital and an overloaded distribution channel, IDC said.

Hewlett-Packard and Dell Computer each had 13 percent market share in 1998, but HP took the No. 2 ranking with $1.7 billion in revenue compared to Dell's $1.6 billion. However, Dell outpaced HP with a market share growth rate of 76 percent in 1998.

IBM's Netfinity line of PC servers brought Big Blue into fourth place with $1.5 billion in revenue and 12 percent market share. IBM, though, suffered from too much inventory in its distribution channel, IDC said.

Unix still a cash cow
Unix led Windows NT and NetWare in revenue in the server operating system area, IDC said. Unix, an operating system that's favored by companies for its maturity and robustness, often shows up in much higher-powered, higher-priced systems than Windows NT or NetWare.

However, Unix shipments grew only at 4 percent in 1998. Within the Unix category, Sun Microsystems' Solaris, Santa Cruz Operation's UnixWare, and HP's HP-UX showed "strong growth," IDC said.

NetWare shipments grew 13.6 percent to more than 1 million in 1998. The increase in sales is good news for NetWare, which declined 6 percent the year before, Novell said.

Linux--a free Unix-like operating system that several companies distribute and support for a profit--grew rapidly in 1998, but it's not the most lucrative market. Worldwide Linux sales reported by IDC amounted to $33 million revenues.

Shipments of IBM's OS/2 operating system, declined 41 percent, and "IBM is repositioning this platform for thin-client computing," IDC said.