IBM Touts Research That Linux Will Slow Windows Server Growth In ERP

IBM is heralding market research claiming that Linux will slow Microsoft's server momentum and grow Linux's share of the enterprise applications market to 15 percent by 2007.

In a conference call Friday, executives from IBM and online research group Peerstone Research said the growth of Microsoft's Windows server operating system will slow as Linux increasingly takes root in the ERP space and, particularly, as commercial Linux distributions incorporating the Linux 2.6 kernel rise in use. Jeff Gould, research director of Peerstone Research, said the survey wasn't paid for or commissioned by IBM.

According to a Peerstone study of 400 installations involving the top three ERP vendors--SAP, PeopleSoft and Oracle--Linux will grow to 15 percent of the ERP installed base by 2007 from 2 percent now.

The integration of the more scalable, multithreaded Linux 2.6 kernel into leading Linux distributions will help drive more enterprise application adoption of the open-source platform, said Adam Jollans, chief Linux technologist at IBM Software Group. Novell released its SUSE Enterprise Linux 9, which incorporates the Linux 2.6 kernel, earlier this year, and Red Hat plans to use Linux 2.6 in its Enterprise Linux 4 product line due next quarter.

"We're seeing a move from simpler uses of Linux to more complex, business-critical uses of Linux," Jollans said. IBM reported that its Linux software revenue quadrupled between 2001 and 2003, with much of its recent growth in the application, integration middleware and data management segements. "We expect that trend to continue with availability of the Linux 2.6 kernel in commercial Linux distributions," Jollans said.Peerstone projects that Unix will remain the leading server OS for ERP installations but that more customers planning to migrate their enterprise applications off Unix will choose Linux over Windows. According to the study, fewer than 20 percent of ERP customers that plan to migrate off Unix in the next three years will move to Windows, while 70 percent plan to move to Linux. Windows will continue to hold a strong second position in this space, but its growth will slow as Linux growth escalates, the research found.

One in five Unix customers will migrate over the next three years, and of that 20 percent, four of five will go to Linux and one in five will go to Windows, according to Peerstone.

"That's a major change, the drying up of what historcialy has been the biggest source of Windows server growth in the enterprise. It'll probably stagnate," said David Tyler, sales director at Peerstone. "Customers believe Linux is scalable enough and has support from the ISVs. It's the end of the frenetic growth rate of the Windows server operating system. The IBM and Oracle sales forces down in the trenches have extraordinary influence here. They're pushing Linux."

Tyler predicts that Microsoft will have to drop the price of Windows globally. "Microsoft [has] not yet aligned their prices to Red Hat or Novell subscriptions, but they'll be under inexorable pressure to do that," he added.

Unix's share of the ERP market, about $8 billion in 2004, is expected to decline from two-thirds now to roughly 50 percent by 2007, while Windows will maintain a 27 percent to 28 percent share, the Peerstone study projected."Linux is not going to take over the world. There's a considerable distance behind Windows and Unix," Tyler said. "But in terms of the growth rate over the next three years, Linux will have a higher growth rate and will double its share of the ERP base each of the next three years."

Peerstone also found that customers aren't worried about SCO's intellectual-property litigation agianst IBM and Linux, though they are concerned about the supply of Linux specialists and potential fragmentation of Linux implementations as customers deploy custom versions.

Heading into 2005, users will be increasingly inclined to consider Linux for application front ends such as SAP where the software has been ported to and supported on Linux, said George Weiss, vice president at research firm Gartner. He agreed that Linux will continue to make inroads in the enterprise application space as the kernel and application stack mature and open source "inevitably" reaches feature parity with Unix. But it's not there yet, he said.

"It's a gray area. Many have integrated their applications on Linux while keeping their back-office [functions] on Sun [Solaris]," Weiss said. "They need to see a critical mass of apps. I don't think its out there yet."