November 28, 2005

Reports of Linux's death premature

Author: Joe Barr

A recent Slashdot offering entitled A Look At Windows Server Outselling Linux pointed to a story on CoolTechZone with the absurd title of "Linux is Doomed, Thanks to Microsoft." The story, title and all, is one of the most egregiously wrong reports of the century. Here's why.

IDC's most recent report on worldwide third quarter server sales shows that for the first time ever, the Windows share of the market is larger than the Unix share. This is hardly a surprise, Windows has been trending upward in the market place the past ten years, and Unix revenues have not kept pace. Remember, Microsoft announced that NT was a Unix killer in the early 90s.

No, Unix is not yet dead, but it appears that Windows has finally caught up to Unix in the server market. In spite of the complete and utter lack of surprise of any informed audience over the fact that the Windows plot and the Unix plot have finally crossed on the sales chart, Varun Dubey opened his fantasy tale with "The Linux community was left stunned when Windows Server software outsold Linux in the server market."

The CoolTechZone report is so wrong on so many levels it is hard to know where to begin. For one thing, Windows has always outsold Linux in the server market. It appears that Dubey is confused about the difference between the Unix market and the Linux market. If he had the barest beginning of a clue about the market, he would be concerned about Windows Server's sales flatlining, not the sales of Linux.

I did a quick analysis of the data provided in IDC's quarterly worldwide server sales reports this morning. Among other things, I learned that each calendar year contains its own peaks and valleys caused by the various fiscal-year ends of the major players as well as the propensity for heavy spending in the fourth quarter. Those factors make the comparison of sequential quarters less revealing than comparison of each quarter with the same quarter the previous year.

One quick example would be to compare the 4th quarter total market sales of 2004 with the 1st quarter of 2005. That sequential comparison will show a drop in the overall market from $14.4 billion to $12.1 billion, or a decline of nearly 20%. Even 2003's 4th quarter comes in higher than the 1st quarter of 2005. But don't conclude from that that the server market is shrinking, because it's not. Year-over-year, meaning a comparison of the 1st quarter of 2005 with the first quarter of 2004, the market grew 5.3%.

To gain a meaningful perspective in comparing the Windows and Linux segments of the server market, I tracked the revenue for each in the third quarter of the past three years: 2003 through 2005. As you can see from the graphs below, over that period of time Linux revenue has nearly doubled, growing from $743 million to more than $1.4 billion. That's an increase of 88%, which is a fairly healthy rate. Windows has done well, too, but in comparison with Linux its 35% gain over the same period looks anemic.

Linux 3rd Quarter Factory Server Sales

Windows 3rd Quarter Factory Server Sales

Note that the IDC figures only show factory purchased revenues. No dollars from off-the-shelf sales of either Linux or Windows are included. If they were, the delta between Linux and Windows growth would no doubt be even greater.

Dubey also ignores the fact that IDC is reporting stronger growth in unit shipments for Linux compared to Windows. According to IDC's report, Linux unit shipments are up 20.5%, while Windows unit shipments are up 15.3% year-over-year. Both operating systems are enjoying healthy growth rates, but Linux's growth rate is higher than Microsoft Windows.

In short, I would file the report from CoolTechZone in the same place where I put the Info-Tech "study" which claimed that business had lost interest in Linux. Both are complete rubbish.

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