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IDC: Windows Dominates Server Market

Windows now dominates the server market as well as the client market, even with the growth of Linux, according to new market research from IDC.

Microsoft products accounted for 55.1 percent of server operating environment shipments in 2002, IDC said in its new study, "Worldwide Client and Server Operating Environment Market Forecast and Analysis, 2002-2007: Microsoft Growth Sets Stage for SOE Dominance."

At the same time, the analyst firm updated its numbers for 2001 to show that the software giant actually had a dominant position of 50.5 percent that year. When IDC first released its estimate for Windows Server's 2001 market share in Sept. 2002, it put Microsoft's share of server shipments at 49 percent. IDC usually adjusts its numbers slightly the following year.

"We define dominant as holding more than 50 percent of the market total, or more than twice the market share of the next competitor. Microsoft makes both accounts on the basis of Windows server operating environment shipments," IDC analyst Al Gillen said.

Paid shipments of the next closest competitor, Linux, made up 23.1 percent of the total server operating environment market, which IDC sizes at 5.7 million new license shipments. The share for other server operating environments are 11 percent for Unix, 9.9 percent for Netware and 1 percent for all others.

Windows servers have grown market share quickly since 2000, according to IDC. In 1998 and 1999, as the industry waited for Microsoft to deliver Windows 2000, Microsoft's share of server unit shipments held steady at 37 percent. In 2000, which saw the release of Windows 2000 early in the year, Microsoft's share jumped to 41 percent, according to IDC's figures at the time. In 2001, that share rocketed all the way up to 50.5 percent. Gillen said he does not expect Windows to be able to gain much more share, let alone attain the kinds of levels Microsoft maintains on the client side.

IDC's report, which also looked at shipments in the 121 million unit client segment, found that Microsoft's Windows client operating environment tightened its already firm grip on that market. Microsoft's share of client operating environments inched up from 93.2 percent in 2001 to 93.8 percent in 2002. Picking up the scraps of the client market were Mac OS at 2.9 percent and Linux at 2.8 percent.

The overall market for operating environments grew by 4.3 percent to $18.6 billion in 2002, according to IDC. However, only Windows and Linux grew revenues that year, and Windows revenues soared by 12.4 percent.

Gillen credited Microsoft's unpopular Licensing 6.0 for the Microsoft revenue gains. "The revenue drivers included two primary factors -- those being new sales of OS products in preparation for movement into Licensing 6.0, and the annuity from the volume licensing itself, which will carry forward through the next couple of years... perhaps long term if Microsoft can renew its volume license agreements with customers," Gillen said.

Ironically, says IDC analyst Dan Kusnetzky, Licensing 6.0 is encouraging Linux growth. "When we asked customers in a survey why they chose Linux, the No. 3 reason is Microsoft licensing," Kusnetzky said.

The IDC report comes fast on the heels of a report by security researchers that the dominance of Windows amplifies the severity of security holes in the operating system.

News of Microsoft's statistical dominance of the server operating environment market also comes as European antitrust regulators seek conclusion of an action that, among other allegations, accuses Microsoft of leveraging a client monopoly to sell server operating systems.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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