The Linux Business Case
IDC a leading market research firm estimates that nearly 500,000 Linux servers were shipped in 2001 and forecasts that more than 2 million Linux servers will be shipped in 2007. This increase reflects a 33.6 percent compound annual growth rate (CAGR) over the forecast period and is more than twice the growth rate of competing operating systems. In fact, it is estimated that Linux had surpassed UNIX in annual server shipments by the end of 2003. IBM estimates that the total server-based Linux market (hardware, software, storage and services) in 2001 was more than billion, and expects the market to grow at a CAGR of 35 percent to more than billion by 2006. Linux has created a discontinuity in the evolution of IT by delivering game changing value to the marketplace. Like previous discontinuities, Linux is creating new business opportunities for new players. For example, more and more companies are embracing Linux as the platform of choice for e-business and core business applications. As these applications continue to be deployed in heterogeneous environments, systems integration and implementation services will be needed.
Although Windows is cited as the leading server operating system, it primarily functions in the lower end of the server market - in markets for e-mail, file, Web, and print servers. We believe Linux largest opportunity is higher up in the market in the data centre, which is generally defined as the servers on which higher-end; mission-critical enterprise applications and databases are run. Linux will continue to take market share from UNIX and will displace it in the data center - UNIX is shown declining from 15.7% of the market to 11.9% by 2006.
We believe there is upside to these numbers for Linux and that the trend toward Linux and away from UNIX will accelerate through the end of the decade, with Linux continuing to take share from other server operating systems and becoming the dominant operating system in the data centre.