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Linux will continue to increase its share of the valuable Enterprise Resource Planning market at the expense of both Microsoft and other Unix vendors, according to a Peerstone Research study.

Peerstone's probe, promoted by IBM, estimates the global installed base for the big three vendors - SAP, PeopleSoft and Oracle - is between 700,000 and 800,000 servers. A typical set-up might include some high volume transactional database servers, middle tier servers running applications for payroll, accounts or human resources, web servers providing the pages which act as an interface for most systems and servers running portal and integration applications to get data from various systems and combine it in useful ways. A really big organisation could have several versions of such a system for different geographies or business lines.

The survey found as of mid-2004 two thirds of the installed base is traditional vendor Unix, such as Solaris, AIX, HP-UX on RISC. Thirty per cent of the installed base run on x86 architecture like Intel's Xeon, AMD Opteron or Itanium (EPIC) - 28 per cent of these run Windows Server and just two per cent on Linux. But they predict Windows Server growth to fall from 12 to 15 per cent this year to between two and five per cent in 2005.

Peerstone attributes the current slowdown in ERP growth to two reasons. First, Oracle, PeopleSoft and Siebel were "very, very late in the lifecycles of the software versions they are selling". SAP is still seeing revenue growth, and is in the middle of moving to new products.

Second, researchers believe the enterprise computing market as a whole is undergoing fundamental change. The move from a "webified client-server architecture" to service orientated architectures will allow more flexible business process applications - but they aren't available yet, so aren't being bought.

Despite this, Peerstone estimates that as much as 25 per cent of the installed base will be replaced this year - approximately 200,000 server units and OS licenses. Peerstone believes both Microsoft and Unix vendors, especially Sun, will suffer in future.

One in five Unix houses expect to change operating system in the next three years. Four out of five of these expect to move to Linux.

There are four reasons for the shift: Linux has hit technological parity with Windows Server and Unix; it runs on cheaper hardware than Unix and is cheaper to acquire than Windows; it is more secure than Windows Server; and it enjoys the support of Oracle and IBM.

Peerstone found two main barriers to widespread adoption of Linux: concerns of a higher total cost of ownership because of the high cost of Linux administrators; and fears raised by SCO's attempted "legal assault on Linux intellectual property".

Peerstone believe labour costs will fall as more people get trained in Linux. It adds: "As for SCO's court case, we believe it has little if any substance, and will sooner or later succumb to IBM's vast legal resources and "hang tough" strategy. ®

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