Marketing Memos

June 28, 2005

Linux over Windows in the Enterprise

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Linux will dominate the server room in large enterprises, and Windows will hold the lead for SMBs.

How’s that for blatant prognostication?

Evans Data reports that almost half of enterprises will likely replace Windows servers with Linux, while they are rapidly replacing UNIX servers as well. Peerstone Research estimates that 70 of enterprises using Windows to host ERP systems will migrate to Linux.

But this drift to Linux is not always reflected in SMBs. Though the survey data is less robust in smaller firms, there are indicators that where Windows is installed, it will stay installed.

Why is this, and what does it mean in the long run? Let’s answer the second question first.

Over time, Linux will become the dominate server-side technology for enterprises. These organizations have massive investments in UNIX, and staffs trained to maintain mission-critical applications on UNIX servers. As commodity hardware becomes more powerful, and the cost points for LinTel servers drops even further, the switching costs from UNIX to Linux becomes very low (and perhaps negative when amortized over several years).

Installed Windows servers in enterprises will fall victim as well. CxOs have clearly shown a preference to reducing the number of in-house technologies, and are centralizing on Linux as the key infrastructure component. Since Windows has not made significant inroads in hosting large-scale applications in enterprise, CxOs will be motivated to switch Windows servers to Linux wherever possible to rid themselves of one more technology set, and one more onerous licensing black hole.

So, in high-end shops with existing UNIX expertise, the drive to reduce cost and technologies will drive Windows off of the raised floor.

But not out of the SMB computer closets.

SMBs typically have IT staffs with more limited depth of expertise. Windows is installed on all desktops, and Windows Server has a high degree of preference due to ease of administration. Given this, SMBs rarely have UNIX gurus, and thus the switching cost for SMBs (switching from Windows to Linux) is much higher.

At present, Linux vendors need not do much. Despite improved scalability options for Windows, enterprises will prefer to switch to Linux, or at worst, stay on UNIX. Microsoft has run into a Great Wall and has no ladder.

But most swords cut both ways, and Linux has found a Great Wall surrounding the SMB market. Windows Server is “good enough” for the average SMB, and unless Linux creates huge gains in manageability, cost savings and/or ISV support, Windows will continue to dominate this market.

Stalemate? For now. But over the long run Linux has the potential of creating the ease of use and ISV support necessary to erode the bricks in Microsoft’s SMB wall. Microsoft does not have the same luxury within the enterprise.

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