IDC: Expect Strong Server OS Shipment Growth, Flat Revenue

Yes, Linux shipments have exploded onto the server operating system scene at a rapid rate of growth, but they still amount to only "a speck of sand" in terms of revenue. So say market researchers at IDC (www.idc.com).

Server operating environment shipments as a whole will increase at a compound annual growth rate (CAGR) of almost 17 percent from 1999 to 2004, IDC finds. Revenue in the same market, however, will remain almost flat with a CAGR of just over 1 percent.

IDC notes several factors for the disparity between shipment growth and revenue growth. These include a marketwide adoption of lower-priced Windows and Linux products, as well as upgrades to the latest Windows server products.

The IDC report shows the big news in the server operating environment market is the growth of Linux shipments. In 1999, Linux overtook NetWare as the number two server operating environment in terms of new license shipments. Linux shipment growth should outpace all other server operating environments through 2004.

IDC forecasts Linux server operating environment shipments will increase at a CAGR of more than 28 percent, from 1.3 million in 1999 to 4.7 million in 2004. Linux revenue will also grow faster than the rest of the market, increasing at a CAGR of over 23 percent. But even with this rapid growth, Linux server operating environment revenue will barely exceed $85 million in 2004, and total Linux server shipments will remain second to Microsoft's Windows Server family.

"From a revenue perspective, Linux is nothing more than a speck of sand on an ocean beach," says Dan Kusnetzky, vice president of system software at IDC. "While there has been much hype about Linux, our research indicates the total market for Linux operating system software in 1999 was about $67 million -- or about the same amount of revenue that Microsoft's operating systems business generated by noon on the third working day of January 1999."

The report, Server Operating Environments Market Forecast and Analysis 2000-2004, analyzes the market for server operating environments, including Unix systems, Microsoft's Windows NT Server and Windows 2000, Novell NetWare, and Linux. The report discusses the trends and issues affecting vendors and forecasts revenues and shipments through 2004.