Microsoft’s Server OS Market Growing

While Microsoft faces a number of lesser competitors, the software giant continues to garner share in server operating system markets.

IDC on Wednesday said Microsoft will hold its dominant position in the
worldwide market for providing operating systems for server environments
through 2007.

The Framingham, Mass.-based research firm went on to say that despite continued competition from Linux, Microsoft’s share of worldwide server operating environment (SOE) new license shipments grew from 50.5 percent in 2001 to 55.1% in 2002. The company’s client operating environment (COE) new license shipments inched up
from 93.2 percent to 93.8 percent of the worldwide market.

Microsoft’s market preponderance in the client operating
environment give it extraordinary power to control pricing for its millions
of dependent customers, IDC said.

“In the client OS market, Microsoft has really strong market position.
Anytime, any vendor has that penetration of the market, it’s difficult for
other companies to displace them,” Gillen said.

“There is some shifting, Linux is picking up parts of the market that
otherwise would be going away,” added Gillen.

While there is enthusiasm for Linux, the open source operating system has been making some strides in the server market, but is still only a niche product on the client side.

“The Linux products for the client OS side in the last three years have
evolved into suitable products for some customers. However, applications
still remain a problem,” said Gillen.

IDC said paid shipments of Linux SOEs accounted for 23.1 percent of the
market, and paid shipments of Linux COEs totaled 2.8 percent of the market
in 2002.

Despite a slump in IT spending, IDC said revenues for operating systems and
subsystems grew by 4.3 percent to $18.6 billion, lead by a 12.4 percent
increase in revenues for Microsoft’s Windows platform.

From all indications, Microsoft is increasing its market share, and the
piece of the market that Linux suppliers are providing is taking share away
from UNIX, Netware and other platforms. “On the server side, Linux has carved a sizeable piece of the market, capturing opportunities at the low-end UNIX and low-end Windows markets,” Gillen said.

“Overall paid unit shipment growth for the SOE segment was 9.6 percent, while paid
COE shipments were up by 5.1 percent compared to 2001. IDC also revealed that the
5.7 million new license shipments achieved in the SOE market during 2002
were split between Microsoft, Linux, combined Unix (11 percent), and Netware
(9.9 percent),” IDC said.

IDC doesn’t foresee a slump in Windows and Linux products through 2007 and
expects a compound annual growth rate on the client side of 7.5 percent, and
9.1 percent on the server side.

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