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Linux sees a Window in enterprise apps market

A report has predicted that more than one in seven ERP servers will be running the open-source operating system by 2007

Companies running ERP systems are increasingly choosing the Linux operating system, rather than Windows or Unix, according to a report published on Friday.

The report, Will Enterprise Linux Stop Windows? found that 2 percent of ERP applications are run on Linux at present, which is expected to grow to 15 percent by 2007. The ERP market is dominated by three vendors -- SAP, Oracle and PeopleSoft -- which the report estimates have been installed on 800,000 servers worldwide.

Independent research firm Peerstone, which carried out the report, said the growth of Windows Server is already slowing sharply due to Linux. It predicts that Windows Server revenue growth will decline from 12 to 15 percent in this financial year, to between 2 to 5 percent in 2005.

However, increased market share for Linux is expected to be mostly at the expense of Unix vendors, such as Sun, which are expected to face a 15 percent decline in market share by 2007, said the report.

Jeff Gould, Peerstone's research director, said that the last year has been a turning point as each of the main ERP vendors has announced support for Linux..

"In the last six to nine months we've hit a tipping point from seeing Windows as the default choice when moving from Unix, to seeing Linux as the default," said Gould. "One out of five ERP customers expect to leave Unix, and about four out of five think they'll go to Linux."

Microsoft and Sun have portrayed the growth of Linux as mostly confined to edge server or single purpose roles, but this is not true, according to the report.

"Both Microsoft and the Unix vendors -- particularly Sun -- stand to suffer greatly if Linux breaks into the ERP stack in a big way," said the report. "Therefore their sales and marketing departments are working overtime to create the impression that this is not happening and cannot happen."

The report is not the first to point out that Microsoft's marketing materials are not objective. Last week open-source vendors said that Microsoft's claim that Linux is at risk of patent threats was simply 'FUD'. In August the UK's advertising watchdog reprimanded Microsoft for its advertising campaign that claimed Linux was 10 times more expensive than its operating system.

The Peerstone report states that ERP customers believe Linux to be a credible alternative as it has achieved approximate technical parity with Unix and Windows Server, runs on cheaper hardware than Unix and is cheaper to acquire than Windows Server.

The potential savings from running Linux instead of Windows have already pointed by some public sector organisations, including the City of Bergen, which is expecting to make savings on software, hardware, licensing and support costs by moving its servers to Linux.

The report is available on the Peerstone Web site.