Windows and Linux Defy the Market Odds

Windows and Linux operating systems are both defying market trends, increasing their share and revenue in a time of low IT spending. Most in the industry are not seeing that kind of good health.
Microsoft Corp.'s operating system environments will hold their lead position in the market through 2007 despite increased competition from Linux, according to a new study from IDC.

Microsoft's share of worldwide licenses for its server operating systems grew from 50.5 percent in 2001 to 55.1 percent in 2002, reports Framingham, Mass.-based IDC, one of the major industry analyst firms. Licenses for Microsoft's desktop operating systems edged up from 93.2 percent in 2001 to 93.8 percent last year.

In comparison, paid shipments of Linux server operating environments brought in 23.1 percent of the market, and Linux on the desktop accounted for 2.8 percent of the market last year.

''Microsoft continues to defy the overall market trends, and has again pulled the market upward from both a unit shipment perspective and from a revenue perspective,'' says Al Gillen, research director for IDCs System Software research. ''Linux was the only other bright spot in 2002, with that operating environment posting both revenue and shipment volume gains.''

Last year saw IT budgets and subsequent expenditures take a sharp hit. However, IDC reports that the operating system market grew by 4.3 percent to hit $18.6 billion. The Microsoft platforms led that market shift with a 12.4 percent revenue increase.

Except for Windows and Linux, all other operating environments saw a drop in revenue in 2002.

But while Microsoft and Linux are seeing positive numbers, many in the industry are still not.

Last month, Gartner, Inc., a major industry analyst firm, reported that after three months of steady IT spending in the U.S. market, sagging small and large businesses pulled down IT spending levels sharply in August.

The news of the drop in spending comes just one month after Gartner reported that a strong increase in IT spending was pointing toward hope for a turnaround in 2004. While May, June and July showed signs of consistent growth, August saw a large drop in spending.

Medium-sized businesses remained consistent for the month. But analysts warn that an IT spending recovery will depend on the strengthening of large and small businesses.

''Only large enterprises appear to be consistently sluggish, which does cause some concern over the depth of any future recovery,'' said David Hankin, senior vice president and general manager of Gartner.

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