OS Survey Results: Microsoft Can Breathe Easy As Linux Levels Off

Two interesting surveys released this week by IDC and Evans spell good news for Microsoft (MSFT) in its battle with the Linux open source software [OSS] operating system for systems dominance.

Matt Eastwood at IDC reports that Windows server revenue grew faster than Linux server revenue in Q107, a placement Microsoft had never achieved before in the almost 10 years IDC has been fielding the server-sales tracking survey.

That indicates to me that Linux as a server platform is leveling off much sooner than proponents anticipated. Red Hat (RAT) has been clear of late that its business is about UNIX migration rather than beating Windows. These results back Red Hat up, although it might not be happy about that. The absolute Linux-based server sales number of $1.6 B for the quarter is at one third of Microsoft’s Windows server sales, which at $4.8B represent 38% of all server revenue. That’s up 2% over the same quarter in 2006 against the aggregate of Linux, Unix, AS/400, zOS, and so forth.

Of course, this data could represent a spike based on some kind of Longhorn anticipation movement. If so, that’s good news for Microsoft as well as it might mean the year of the Vista (FY 2007) will be followed by the year of the Longhorn (FY 2008), leaving breathing room until Microsoft has to execute the year of the Google (GOOG) attack.

Also, this does not mean Microsoft is against the OSS movement in general. Other recent research analyzed by me this week at ebizQ.net (and my experience in general) shows that, as a much higher level OSS runs on Windows as Linux.

Meanwhile, the Evans data (released on Business Wire but not yet on Evans’ Web site) says, “Overall, the largest portion (50%) of software professionals expect to increase their IT development spending with Microsoft more than any other company…” The study was designed to get the opinions and attitudes of software professionals specifically. Microsoft ranked highest for expected increases in IT spending. Other leading vendors ranking high in the survey according to the press release were BEA (BEAS), IBM (IBM) and SAP (SAP).

If good news, like bad news, comes in threes, stand by for the next positive Microsoft research finding: confirmation of the slow, steady uptake in Microsoft ERP offerings, for example.

Comments

[Malkiel:]

We need another quarter for some of Microsoft's spin about its sales to shake out and see whether pent-up hardware demand was behind some of its Vista sales, though I don't doubt your analysis. I also wonder to what extent sales are decided on the basis of new desirable hardware which may come with Vista server software as part of the package.

2007 May 23 05:45 PM

[Dennis Byro...:]

Just to be clear, this is not a matter of Microsoft spin or anything else. This is the user community voting with their pocketbook.

The server-market results reported by IDC for Q1 2007 (and every quarter in what they call their Server Tracker) are not related to the long delayed and much discussed Microsoft Vista client operating software sales in the first quarter (IDC has another service called the PC Tracker for that). The Server Tracker, according to IDC press release, is a measurement of HP, IBM (all products including AS/400 and mainframes), Sun, Dell, Fujitsu, and so forth servers and whether they get provisioned with AS/400, Linux, Unix (all variants), Windows, zOS, and so forth operating systems.

2007 May 24 06:40 AM

[cameronm:]

I think your headline is quite misleading. That Windows servers grew 10.4% and Linux at 10% in a single quarter is hardly time for popping champagne corks in Redmond. The Linux beast is not dead, it "continues" (this being the operative word) to grow at double digit rates according to IDC. This was not a typical quarter for Windows servers - it was an excellent quarter for Windows servers being compared to a typical quarter for Linux. The growth leader continues to be Linux, it's just that this one quarter, Windows tied them....

Second, far more surprising to me is that volume server shipments, which constitute both the Windows server and Linux server market grew at approx. 1/2 the rate of hi-end servers (4.7% vs. 8.5%). This is the key to understanding your Windows and Linux comparison. This was a highly unusual quarter. it is according to IDC only the second time in the time they have tracked server shipments that high-end servers out grew volume servers. This is out of what 40-60 quarters they have tracked??? In short there is no real signal here.

2007 May 24 04:59 PM

[lordshipmayhem:]

The problem I have with sales-based surveys of this sort is that the nature of open-source means a lot of activity cannot be captured. Servers sold without operating systems (with Linux installed by the purchaser) and older servers converted from Windows or Unix to Linux are not counted as new Linux installations.

Plus, absolute dollar value of purchases is skewed by the fact that the Linux OS itself is free while there is a fee to obtaining the Windows licence and much of the ancillary closed-source applications required for administering the server. Therefore, you are comparing hardware cost for Linux vs. hardware cost & licence fees for Windows.

As the IT departments of more and more companies (especially, but not limited to, the Fortune 500) become comfortable with configuring Linux servers in-house and buy their servers OS-free, I expect a drop in Linux "revenue". This will make the sales surveys even less accurate and even less meaningful in terms of a comparison of Windows vs. Linux server uptake.

2007 Jun 01 12:01 PM