Since the dot-com Boom of the late 1990s, the server market has evolved into a battle with multiple front lines. There was the rise of Linux, which threatened not only the advancement of Windows into backrooms but established Unix platforms, as well. And there was the commodification of hardware, weakening demand for traditional “Big Iron” servers as back-end processing shifted to increasingly affordable and powerful x86-based solutions.
Enterprise Unix is riddled with contradictions. In terms of revenue generated, it’s large; in terms of growth, it’s negative. Unix remains the back bone of many enterprise server rooms, but the choices are diminishing.
The server market is no place for the complacent. With more than $50 billion pumping into back-end infrastructure, it would seem like there’s lots of cash to go around. According to research firm IDC, about $17.5 billion of that green went to Unix servers in 2005. However, $17.7 billion was won by Microsoft, the first year in which the Redmond giant edged out Unix in the server room. Linux servers picked up another $5.3 billion, a likely factor in the slightly diminishing potential Unix revenue.
“Low-cost” platforms, like AMD’s Opteron and new dual-core processors, continue to influence
the server market. According to IDC, 2006 saw a continued squeeze on middle-range platforms, with growth occurring only at the high end (32-plus socket systems) and the low end (single-socket systems). With dual cores doing the work in one socket that used to require two-, and four- and eight- core systems on the horizon from both AMD and Intel, the “low end” will increasingly offer bang-for-the-buck attractiveness.
In the overall server landscape, Unix systems represented $4.3 billion of the worldwide server market in second-quarter 2006, or 35 percent of the market. This represents a 1.6 percent decline in revenue and a 1.8 percent decline in shipments from the previous year, says IDC.
Three major players account for nearly 90 percent of all Unix revenue in second-quarter 2006: Sun (34 percent), IBM (28 percent), and HP (28 percent), in that order, according to IDC.
It wasn’t always this way. Sun, which dominated the Unix server market in the late 1990s, was overtaken by IBM as recently as 2005. At the time, IDC reported Sun’s 28 percent revenue share was down 7 percent, and both IBM’s and HP’s were up.
Not all analysts were in agreement, however. IDC’s rival Gartner’s 2005 report, for example, gave Sun 33 percent of the $4.2 billion Unix market.
Still, the 2005 numbers suggested IBM had finally been eclipsed Sun, the culmination of a long descent from Sun’s domination of the Unix server market in the late 1990s. Analysts pinned Sun’s flagging revenue on its slow acknowledgment of hardware commodification, while HP and IBM more aggressively pursued the x86 platform rising on the flood of open-source alternatives.
Sun planted the seeds for its resurgence in early 2005, with the release of open source Solaris 10 and expanded availability for x86 platforms. Clearly, the market approved. By second-quarter 2006, revenue had shot up an impressive 15.5 percent compared to the previous year, and in contrast with single-digit losses at IBM and HP.
While Solaris is, for now, the breakout enterprise Unix for 2006, the market has seen a couple of smaller Unix platforms continue to diminish. In September, SGI announced the end-of-life for its Irix operating system, originally launched in 1988. Irix pioneered Unix support for graphics and video intensive work, as well as the vaunted XFS file system. But its last major version was released in 1998, as SGI shifted its offerings to the Linux platform. Irix production ends at the end of 2006 but support will continue through at least 2013.
The SCO Group continues to see revenue decline on its two Unix products, OpenServer and UnixWare. Embattled SCO has been engaged in a long, costly and controversial lawsuit with IBM and others over claims that their version of Linux contains code illegally lifted from SCO intellectual property. SCO’s revenue dropped more than $1.5 million between July 2005 and July 2006, down to $6.2 million, on the heels of distrust over its claims and lack of confidence in its future.
Solaris Goes Open Source
The big story at Sun has been Solaris 10. Two major shifts in Sun’s business model have been vigorously championed since Jonathan Schwartz took the CEO helm from Scott McNealy in April 2006.
While Sun continues to earn the lion’s share of revenue from its UltraSPARC IV based systems, the company has embraced the heterogeneous platform model already adopted by rivals IBM and HP, among others. To see that through, Sun now offers systems based on AMD’s dual-core Opteron line up, starting at under $3,000.
Perhaps the even bigger revolution at Sun has been the open sourcing of Solaris 10, likely a response to the widespread adoption of Linux by enterprise competitors like IBM. By releasing the source code to its enterprise platform, Sun hopes to cultivate the kind of developer-centric enthusiasm that has driven much of the growth of open source alternatives, like Linux. OpenSolaris was released under the CDDL, or Common Development and Distribution License, which provides developers with generous leeway in how they can modify or re-use components of the Solaris source code.
Relative to Windows and Linux, the Unix enterprise server market continues to shrink — a process that has been going on for at least 10 years. But because absolute dollars remain large, at $4.3 billion, the contenders continue the fight.
Besides energizing developers, Solaris 10 is an aggressive effort to court customers from across the enterprise Unix spectrum. Because it is free to download and operate, in personal and commercial use (including on multiprocessor systems and on unlimited machines), the barrier to entry for Solaris adoption is now very low. Organizations need only register their system with Sun at install time to receive a full, no-cost license.
Because Solaris now runs on x86-based systems (including 64-bit), customers can install the operating system on a variety of hardware platforms. Sun claims 1 million Solaris licenses were registered in the first two months of availability, and 70 percent of free Solaris installations are on IBM, HP and Dell servers.
Sun’s aim is to hook customers on Solaris, which in its free incarnation does not include commercial support, and then sell them on support and competitively priced hardware. Basic support services can be purchased at a starting price of $120 per year, and higher-end enterprise offerings are available bundled with Sun’s own systems.
The BSD Scene
BSD is dead — except when it isn’t. The BSD family of Unix-derived platforms has seen its share of premature obituaries. The Berkeley Software Distribution is one of the original descendants of Unix, a branch on the family tree that also spawned AT&T Unix System V, itself the lineage of several other major enterprise Unix systems, including IBM AIX and HP-UX.
In modern times, the BSD family has shaken down into three major forks — FreeBSD, NetBSD and OpenBSD. Additionally, BSD-based Darwin is the Unix core within Apple OS X. Certainly, no one is declaring OS X at death’s door, as its overall market share edges near 5 percent. Apple’s presence in the enterprise market remains small, however. With its transition to x86 processors, Apple may look to take a larger bite out of the enterprise with its BSD-based platform.
Mixed news faces the three traditional BSD projects. NetBSD, the BSD with the strongest emphasis on portability to a wide range of architectures, is perhaps in the most peril. In August 2006, Charles Hannum, a founder, developer, and past president of the NetBSD Project and Foundation, wrote an open letter to the BSD community describing NetBSD development as having “stagnated to the point of irrelevance.” He describes his analysis of where NetBSD has gone awry as essentially a eulogy.
FreeBSD and OpenBSD continue to be actively developed. OpenBSD, the ultra-secure variant, released its version 3.9 in May 2006, and OpenBSD 4.0 was released November 2006. The BSD Certification Group published a usage report estimating OpenBSD adoption at about 33 percent.
The majority of BSD users continue to choose market leader FreeBSD, with a reported 77 percent of BSD installations. According to a May 2006 Netcraft survey, of the top five most reliable Internet hosts that month, four were FreeBSD installations. Statistics fluctuate month to month, but FreeBSD-based providers consistently place among the top 10 in monthly uptime. While overall market share numbers are hard to come by in the BSD family, FreeBSD is particularly popular in hosting. Yahoo is believed to be the largest FreeBSD user, supporting more than 260,000 user sites on the platform.
IBM’s AIX Unix server celebrated its 20th anniversary in 2006. Although it led the Big Three in 2005, its moment at the summit was short-lived. By the second quarter of 2006, both IBM and HP slipped slightly and, in this neck-and-neck three-horse race, Sun again pulled ahead.
Interestingly, all three competitors are throwing new iron at a declining market. Relative to Windows and Linux, the Unix enterprise server market continues to shrink — a process that has been going on for at least 10 years. But because absolute dollars remain large, at $4.3 billion, the contenders continue the fight.
To that end, IBM has boosted its high-end products with the Power 5+ processor bring a 30 percent performance gain to its 16- and 32-processor configurations. On the software side, IBM offers both Linux and AIX for its Power hardware but continues to consider AIX its flagship commercial Unix. IBM contributes to open source on the Linux side but claims to have no plans to follow Sun’s lead in open sourcing its commercial Unix.
For its part, HP is positioning its enterprise HP-UX on the strength economics. Touting new TCO research by the IT consultant Alinean, HP argues that its Unix is a better financial value than Solaris or AIX. Making heavy use of virtualization, HP-UX claims to squeeze more productivity out of its systems.
Speaking of virtualization, it will likely be a key term in the near- and long-term future of enterprise Unix. As virtualization technology matures in both software and hardware, look for all the enterprise Unix vendors to increasingly rely on this strategy to maximize performance-per-watt.