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Linux Servers Up, Unix Down: Survey

Linux servers are on the rise again thanks in part to low-end (under $5,000) x86-based servers, according to a new survey by market research firm Gartner.

The report said server unit growth for the March quarter was up 27 percent (1.6 million units) over last year while worldwide revenues grew 9.3 percent to $11.8 billion. The survey confirms the now well-established hum of strong growth in the server sector.

"On a regional basis, the United States continued to be the largest server market, as it accounted for 37.8 percent of global server revenue," Michael McLaughlin, principal analyst for Gartner, said in a statement.

Despite legal threats from SCO Group and competition from Microsoft, Gartner's report said Linux continued to be the growth powerhouse in the operating systems server market, with a revenue increase of 57.3 percent in the first quarter of 2004.

Windows continued to be the operating system of choice for servers with revenue hitting 35.1 percent of total market share. On a shipment basis, Windows dominated all others with 69.4 percent of the OS server market.

As for Unix, the study said the OS suffered a decline with first quarter revenue down 2.3 percent from the first quarter of last year.

Gartner still found a strong need for mainframes. Revenue for the monster boxes totaled $1.7 billion in the first quarter of 2004, a 12 percent increase from the same period last year.

Each of the major vendors of the low-end servers, IBM, HP, Sun, and Dell , have something to brag about -- depending on how they read Gartner's tea leaves with respect to product cycles, industry segment emphasis and geographic demand patterns.

Although IBM made the most money from servers in the last three months, HP sold the most units, and Dell gained the most ground, said Mark Stahlman, technology analyst with Caris & Company. He told internetnews.com the only vendor who is positioned for significant upside in this market is Sun.

Why? For the simple reason that they are the most significant new entrant in this high growth market.

"Having mistakenly avoided this market over the past years, Sun is now aggressively selling into it -- particularly with its V20z 2-way Opteron box," Stahlman said. "As Sun ramps volume on this product and adds 4-way systems (expected to be announced at the upcoming Shanghai event) and expands its product-line with new designs from [Senior Vice President] Andy Bechtolsheim's group, it is expected that Sun will gain substantial market share."

Sun has been working very hard to make up for lost time, bolstering its volume server lineup with support for x86 products. The company recently said its Hardware Compatibility List (HCL) for the Solaris OS on x86, doubled in size in the last six months. Key ISVs like BEA, Sybase, Oracle, and VERITAS have already signed on to support their solutions on Solaris x86.