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The Register: Linux server growth threatens MS revenue supply

Jul 25, 2000, 17:17 (16 Talkback[s])
(Other stories by John Lettice)

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"This week's IDC report on the server market has some tantalising numbers for Linux fanciers. Linux server shipments will climb faster than the rest of the market, resulting in 2004 in Linux shipments of around 4.7 million, finally within spitting distance of Microsoft, at 5.7 million. But although this holds the possibility of Linux taking the lead in 2005 or 2006, that's not the real story - the changing underlying economics of the market are what Microsoft really has to be worried about."

"As our old friend IDC pundit Dan Kusnetzky colourfully puts it in the release: "From a revenue perspective, Linux is nothing more than a speck of sand on an ocean beach." Total Linux sales last year, he says, amounted to about the same as Microsoft's operating systems business generated by the third working day of January 1999. So that's point one - Linux server shipments will start to catch up on Microsoft, but there will remain a vast chasm between relative revenue levels, so maybe Microsoft shouldn't worry, right?"

"Well maybe. The market as a whole will grow 17 per cent a year, with Linux chalking up 28 per cent within this. But revenues will be flat, with growth of only one per cent a year. This can partially be ascribed to the higher growth rate of Linux pulling the average down, but IDC expects a surge of shipments of upgrades to Microsoft server products, which will bring the number of shipments up but will only generate upgrade revenue."

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