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March 7, 1994

THE X WINDOW MARKET MAY HAVE GROWN BY 51% IN 1993, BUT THE PRESSURE IS ON IN 1994

By CBR Staff Writer

Although the value of the worldwide X Window System market increased 51% in 1993 to $1,200m, the X Business Group Inc reckons that to maintain such growth levels, X will need to convince the industry it has a viable part to play in the whole world of client-server systems, not just for Unix, but for other complementary operating systems too. Nonetheless, 1993 was a successful year for X Window in the distributed Unix environment, with the installed base of X-capable terminals topping 3.5m by the end of the year and the market approaching saturation point in graphical-based Unix sites. As the market research and consultancy firm’s president Stephen Auditore points out, X has become accepted as the de facto standard for distributed windowing in technical organisations and is now being adopted by those running commercial Unix in the US in such industries as telecommunications, defence and aerospace, manufacturing and development. X adoption and use in Europe and Asia was still confined mostly to technical applications and organisations, however, although the industry did make its first sales into Eastern Europe, particularly in the Czech Republic and Hungary. X terminals continued in their role as most popular X product, accounting for 51% of the total market, although this was down on the 1992 figure of 62%. While worldwide unit shipments increased 35% to 265,712, the market grew only 23% to $615.4m in value due to competitive price pressures, which forced many vendors to introduce discount schemes. Improved performance and features from personal computer-based X servers also led some traditional X terminal customers to choose PC X servers instead. Despite this, the X Business Group’s vice president Greg Blatnik claims the worldwide X terminal market grew at a faster rate than nearly any other peripheral market due to its rapid expansion into into commercial sites and applications – commercial shipments grew 37% compared with 31% in 1992.

Saturated

Furthermore, X terminals provide overall cost-of-ownership benefits, not just acquisition savings, he says. However, Blatnik does acknowledge that the technical market for X terminals in the US is all but saturated, and says future growth will come from commercial customers and applications such as banking, customer and financial services, and from organisations wanting to replace their ageing 3270 terminals as they downsize from mainframes. He expects unit shipments to increase by 30% in 1994 and the market to be worth more than $1,000m by 1997. On the awards front, the prize for X terminal leader in shipment terms for the fifth year in succession went to Network Computing Devices Inc, which sold 68,000 units and boasted a 26% market share. Hewlett-Packard Co came in second with 25%, but won in revenue terms for the third consecutive year, generating some $143.8m due to exceptional demand for its colour products. In fact, colour terminals made up some 73% of all units shipped or 81% of the market in revenue terms because, according to Blatnik, not only do they enhance the graphical user environment and amplify information interpretation, but prices for colour X terminals were much more affordable in 1993. According to X Business Group industry analyst Christopher Amaru, the PC X server market was expanding at twice the rate of the $1,100m X Window system industry in 1993. Although he expects this to slow in 1994, he believes, As PC X servers move towards offering the same performance as X terminals as well as a total PC-Unix connectivity solution, the market should continue to show healthy growth. Worldwide PC X server factory revenues in 1993 increased more than 100% to $54.7m, which, Amaru reckons, was driven by continued growth in the installed base of personal computers, running Microsoft Corp’s Windows system.

By Catherine Everett

This area generated $41.2m or 75% of the total PC X server market. The leading supplier for the third year in a row was Hummingbird Communications Ltd, which claimed more than 32% of the market, based on revenues of $1

7.1m. Network Computing Devices Inc came in second with 17%, generating turnover of $9.3m – helped by its announcement last year of PC-Xware. Despite the continued dominance of X terminals in the X world, the X Business Group now believes the industry is predominantly a software one, and divides the fast-growing interface development technology sector into four main areas: interface development tools; user interface management systems; cross-system development systems; and dynamic data visualisation tools. In 1993, the total market grew 64% to $133m in factory revenue terms. But the organisation reckons the industry could have generated another $12m or so in revenues had certain events in the Unix industry not occurred. These include Sun Microsystems Inc dropping Open Look, DEC dropping VUIT, and the industry backing the Common Unix application programming interface, which led to fewer than expected sales of Open Look and cross-system development systems. As a result, it was the dynamic data visualisation sector that dominated the interface development industry in 1993, although growth was slower than expected. This area claimed a 33% share of the total market, generating more than $44m in sales from 1,995 licences, including both development and run-time ones. VI Corp emerged as leader with a 38% market share, followed by SL Corp – its 20% share was garnered from development licences. Cross-system development systems came next with 32% of the market, and sales of $43m from 4,360 licences, again including both development and run-time ones. The leading supplier in this area was XVT Corp with a 52% market share, followed by Visix Software Inc, taking a 23% share with its Galaxy development environment although Visix would argue that it covers a somewhat wider set of requirements than the XVT tools. Interface development tools were third, claiming 19% of the total market. Some 31,555 licences were sold to a total value of $25.5m, and Integrated Computer Solutions Inc was top of the pile. It sold 18,365 and boasted a 59% market share, while SunSoft trailed behind in second place with only 11%.

Niche product

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Lastly came user interface management systems, generating $20.2m in factory revenue from the sale of 14,600 development licences. Visual Edge Technology Inc took the lion’s share of this market with 64%. However, because the company sells only via OEM customers, the total end-user market is actually estimated to be worth between $50m and $60m. Looking to the future, however, Auditore believes that X needs to position itself correctly if the market is to continue to grow. It must be usable and be viewed as a basic enabling technology of interoperability, not just a distributed windowing system for Unix, he says. As a result, to prevent it from becoming a niche product, vendors must sell potential X users on X being a cost-effective, industry standard solution to linking the desktop to the organisational computer… X can be the glue that binds the desktop to the server, regardless of operating system. Auditore feels that X needs to be positioned as a technology that is complementary to other client-server models [than just the Unix one], not competitive. And one way of doing this could be via Microsoft Corp’s Windows NT. The X Business Group considers that the work being done by various vendors, such as Digital Equipment Corp and Ontario, Canada-based Hummingbird Communications Ltd, on building multi-user client and server versions of NT that support X as significant. Even so, it reckons there will be no real breakthrough here until customers can use X to distribute NT applications over the network. Still, Auditore feels 1994 will be a watershed year and that continued customer uncertainty regarding client-server model selection and the turbulent economic times in Europe will place considerable pressure on the X Window industry to articulate a clear, meaningful position for X in the future.

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