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 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 percent 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.

OneStat.com found that of Microsoft’s global operating system market share of 97 percent, Windows XP dominates at 38.48 percent, and Windows 98 accounts for 22.56 percent.

As of September 2003, the global usage share of Apple’s Macintosh operating system is 1.49 percent – up from 1.43 percent in 2002. Market share for Linux nearly doubled in the year from 0.26 percent to 0.51 percent.