Linux server revenue grew slightly in the fourth quarter of 2006, according to the latest research from IDC. But while overall Linux usage is growing, the number of physical Linux servers being shipped to enterprises may be suffering due to the trend of virtualization.

Linux server revenue grew 15.3% in the fourth quarter of 2006, compared to the same quarter a year ago. Linux server sales reached $1.8 billion. This represents around 12% of the overall all server revenue worldwide. Comparatively, Linux falls behind Windows, with 35% of worldwide revenue, and Unix, with 33.5% of server revenue. (Linux just barely beat out IBM's Z/OS mainframe in terms of revenue.)

“As IT consolidation extends its reach into the open source domain,” IDC says, this has significantly affected the number of overall Linux severs being shipped. The research firms says that Linux server shipments fell .08% — a slight drop, but a significant one, considering that Linux server shipments has grown in the double digits for the previous 18 quarters.

While IBM was the overall server revenue champ in 2006 (37.9% of worldwide server sales), HP was the top Linux server vendor last year. The company accounted for 31.2% of the $1.8 billion in Linux servers sold, followed by IBM and Dell.

The third-place standing of Linux in terms of server revenue, and its decline in server shipments, are probably not a reflection of any sort of decline of Linux usage, however. Machines pre-loaded with Linux typically cost less than other pre-installed server hardware. Many IT shops are also using free versions of Linux — such as Fedora and CentOS — installed on either blank machines, or as IDC indicates, as virtual machines running on top of a single Linux host machine.