Windows leads as server market booms

IDG News Service - For the first time, Microsoft Windows was the leading operating system in new servers in the third quarter, as the overall worldwide server market grew a robust 8.1%, market research company IDC said yesterday.

After a long period focused on cutting costs and buying servers just to run current applications, enterprises are once again investing strategically in systems to handle future workloads, said IDC analyst Matt Eastwood. And IT organizations are again being asked to support real growth, he said.

Also yesterday, Gartner Inc. reported that worldwide server revenue grew 5.6% during the third quarter. Gains in sales of servers costing less than $25,000 led the upward trend, according to both research companies.

Sales of Windows systems accounted for 36.9% of all server revenue in the quarter, versus 31.7% for Unix and 11.5% for Linux, Eastwood said. Enterprises increasingly are using Windows-based servers for applications such as ERP in addition to traditional uses such as e-mail and Web hosting. Migration from Windows NT to newer versions of Windows also is driving sales, he said.

Server revenue grew faster than IDC's projection, which was for 6% growth, according to Eastwood.

"For the first time, you could say that Microsoft has its own legacy, and that legacy is NT," Eastwood said. How much of Windows' gain will be permanent is hard to say, he added. However, just two years ago, Windows servers were only 31.5% of the market, according to IDC. Gartner's figures showed Windows servers with more than 37% of the market, also in first place, according to analyst Joseph Gonzalez.

IBM, Hewlett-Packard Co. and Dell Inc. each had revenue growth faster than the market, and Dell's gains pushed it firmly into third place ahead of Sun Microsystems Inc. after several quarters of virtual ties between the two contenders, Eastwood said. Dell servers brought in factory revenue of $1.3 billion, giving it 10.5% market share, whereas Sun's roughly $1.1 billion gave it a market share of 8.7%. Sun's revenue was down 7.6% from a year earlier, while Dell's grew 11.8%.


The kinds of servers Dell specializes in -- x86-based Windows and Linux systems -- are on a roll right now, Eastwood pointed out.

"Sun was slow to react to momentum around the x86 servers. They're reacting now ... but it's going to take them a few quarters to get their story out," Eastwood said.

IBM remained the top vendor in revenue terms, with a gain of 10.3% to more than $4 billion, while HP stayed in second place as its revenue