Disruption awaits OS software market

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Worldwide operating system (OS) software revenue is likely to rise, despite disruptions within the industry, according to a new study from Gartner.

The information technology research and advisory company has forecast revenues for 2008 totalling £14.83 billion ($28.9 billion), an increase of 7.2 per cent from last year. By 2012, worldwide OS software revenue is expected to exceed further to £19.24 billion ($37.5 billion).

However, despite positive market predictions, Gartner's report found that the industry will encounter difficulties in the medium-to-long-term concerning virtualisation and multicore processors.

This is because embedding applications and OS virtual machines could displace OS as a traditional infrastructure, and multicore chips will drive changes in the licensing model of vendors.

Meanwhile, delivery models, such as software as a service (Saas), will change the way software and services are delivered, making the traditional monolithic OS less important and affecting vendors' revenue.

Senior research analyst at Gartner Matthew Cheung said that there were four main issues facing the industry.

"Unix to Linux substitutions, users' behaviours, disruptive technology and anti-piracy endeavours will continue to shape the market and change the market dynamics."

The Linux segment is currently the fastest-growing server OS market, substituting Unix, due to its cost-performance ratio, high availability of support resources and lower cost of ownership, according to Cheung.

Also expected to change the shape of the OS industry is utility, or cloud, computing, as both organisations and end users require more on-demand infrastructure services, as opposed to on-premises, self-owned or commodity-type solutions.

In the short-term, Gartner expects the end of Windows XP and the release of the first Windows Vista Service Pack in the first half of 2008 to boost Microsoft's client OS revenue.

Although, Gartner also expects Microsoft's anti-piracy programme to improve revenue performance, the US recession is likely to have a negative affect on PC purchases, which could hit vendor revenue.

But Cheung is confident that such technological disruptions and shifts in users' behaviour can be dealt with effectively.

"Software vendors can prepare for these technology shifts by ensuring that they can provide offerings compatible to virtualised environments, by evaluating solid SaaS offerings, by planning open-source and cloud computing strategies, and by formulating new pricing schemes on multicore machines."

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