IDC Expects Strong Shipment Growth but Flat Revenues in the Market for Server Operating Environments

FRAMINGHAM, MA – JULY 24, 2000 – Solid shipment growth in the worldwide market for server operating environments will not translate into strong revenue growth. According to a new report from IDC, Server Operating Environments Market Forecast and Analysis, 2000-2004, shipments will increase at a compound annual growth rate (CAGR) of almost 17% from 1999 to 2004. Revenues, meanwhile, will remain fairly flat with a CAGR just over 1%.


"Several factors will contribute to the disparity between revenue and shipment growth in the market for server operating environments," said Al Gillen, manager of IDC's Server Operating Environments and Software research. "One major factor will be the market's transition to lower-priced Microsoft and Linux products. Also, a surge of upgrades to the various server versions of Windows 2000 products will boost shipments while generating only upgrade revenue, lowering average per-product revenue."

The need to support Internet and ecommerce applications as well as traditional online transaction processing, database, file print, and application workloads will drive demand for server operating environments.

According to IDC, the big news in the server operating environment market is the mushrooming shipments of Linux. In 1999, Linux overtook NetWare as the number-two server operating environment in terms of new license shipments, and Linux shipment growth will outpace all other server operating environments through 2004. IDC forecasts Linux server operating environment shipments will increase at a CAGR of more than 28% from 1.3 million in 1999 to 4.7 million in 2004. Linux revenues will also grow faster than the rest of the market, increasing at a CAGR of over 23%. However, even with this high growth, Linux server operating environment revenues will barely exceed $85 million in 2004, and total Linux server shipments will remain second to Microsoft's Windows Server product family.

"From a revenue perspective, Linux is nothing more than a speck of sand on an ocean beach," said Dan Kusnetzky, vice president of System Software at IDC. "While there has been much hype about Linux, our research indicates the total market for Linux operating system software in 1999 was about $67 million — or about the same amount of revenue that Microsoft's operating systems business generated by noon on the third working day of January 1999."

IDC's new report, Server Operating Environments Market Forecast and Analysis, 2000-2004 (IDC #B22347), analyzes the market for server operating environments, including Unix operating systems, Microsoft's Windows NT Server and Windows 2000, Novell NetWare, and Linux. The report discusses the trends and issues affecting vendors who sell products in this space. It forecasts revenues and shipments through 2004. To purchase the report, contact Cheryl Toffel at 1-800-343-4952, extension 4389 or

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at

IDC is a division of IDG, the world's leading IT media, research and exposition company.

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