Microsoft Exec: Windows, Linux Squeeze Unix

Despite optimistic predictions for Linux, Microsoft executive downplays threat and says Windows is taking market share from Unix in the x86 market.

Linux distributions continue to amass on the border of Windows Servers enterprise territory, but top executives at Microsoft Corp. are not blinking. Thats because the real battle for software growth this year, they say, will center on low-cost, high-volume x86 hardware and drawing enterprises away from proprietary Unix.

Officials for the Redmond, Wash., company contend that Microsoft is more than holding its own against proprietary Unix flavors such as Sun Microsystems Inc.s Solaris, IBMs AIX and Hewlett-Packard Co.s HP-UX. Part of that confidence stems from the numbers. "Microsoft sold more units of Windows [Server] than all flavors of Unix combined for the first time," said Bob Muglia, Microsofts senior vice president for Windows Server, in an interview.

"This is a very big deal. Now the world ecosystem around IT makes more money on Windows than they make on all of Unix combined. Thats a pretty big deal to us."

Some enterprise users, such as Brian Riley, a senior programmer and analyst at a large U.S. health care services company, said server choices are dictated by the application. And in his case, that means Windows. Riley is replacing two IBM AS/400s with an application that runs on Windows Server 2003. The company still runs AIX on some x86 boxes.

"The real issue is the platform on which the applications are being written because that is the platform that people are going to choose. They usually choose the application first, then base their operating system choice on that," Riley said.

And, despite accelerating growth of Linux in the enterprise, Microsoft is as confident as ever. A study released late last month by IDC, of Framingham, Mass., shows that many enterprises will choose Linux as their application platform over Windows.

The report, which surveyed IT managers in 10 countries on customer adoption plans and perceptions relating to Linux, predicted that revenue growth for packaged applications and infrastructure software running on Linux will exceed $14 billion in the next four years, growing at a compound annual rate of more than 44 percent.

The IDC report, "Worldwide Linux 2004-2008 Forecast: Moving from Niche to Mainstream," also found that the combined worldwide market for desktops, servers and packaged software running on Linux is forecast to grow at a compound annual growth rate of 25.9 percent worldwide, reaching $35.7 billion by 2008. Meanwhile, new and redeployed PCs running Linux are forecast to grow to $10 billion and 17 million units by 2008 with an installed base of more than 42.6 million units.

Microsofts Muglia downplayed the significance of those figures. The percentage growth of Windows will be smaller than for Linux because of Windows much larger installed base, Muglia said, adding that Microsoft continues to track how well it is doing against Linux, which grew by a smaller percentage last year than it had in 2003.

"Its growth has slowed, and we still view Linux as a technology that is used by our competitors to build competitor technologies to Microsoft," Muglia said. "By and large, we are doing more than holding our own in most categories and are even going after some categories where Linux has dominated."

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James Dobson, a systems architect at Dartmouth College, in Hanover, N.H., disagreed with Muglias assessment, saying that Microsoft is wrong to state that vendors are using Linux to make competitive systems. "It is the customers that are building systems and solutions with Linux. This is the major benefit of a real open system," Dobson said.

Muglia also disputed industry reports that most Unix migrations from proprietary x86 systems are to Linux rather than to Windows, saying that Microsoft research shows that about 60 percent of those migrations are to Windows.

Next Page: Going after Novell customers.