On the slow death of UNIX and the rise of Linux
Commercial UNIX variants arose from AT&T UNIX (first released in 1979). The market became dominated primarily by high-end RISC-based hardware manufacturers, such as DEC, IBM, SGI, and Sun. A number of companies did also release versions for the the Intell architecture including Microsoft for a while (they sold that division eventually to the Santa Clara Operation, or SCO, now Tarantella). Eventually, Novell gave the UNIX trademark to the Open Group which now certifies various operating environments to be "UNIX compliant."
Each UNIX vendor has pursued an aggressive strategy of differentiation and tied their operating systems to their hardware. This methodology, while perhaps necessary to remain competitive, has lead to much higher cost for UNIX-based systems. This is because the marginal cost for the operating system is nearly 0, while the research and development cost is quite high.
With the release of MS-DOS 1.0, Microsoft began what was to be a very successful coup in the operating system indistry. They established an operating system which for the first time could run on several different vendor's computer systems and the result was a collapse in prices both of software and of hardware. For a while, the more reliabel UNIX servers were immune and the real causalties were the Commodore Amiga, Apple, IBM, and others in the low-end markets. DOS lacked any capabilities to handle multi-process or multi-user environments so it was completely unsuitable for any server operations of any sort. DOS was, however, wildly successful because it lead to inexpensive and ubiquitous computers.
In 1991, Linus Torvalds began working on what was to be the Linux kernel. Initially, his motivation was exclusively leasure-oriented (as indicated by his mention that it would not be big and professional like GNU). Over time, the development of Linux has accellerated damatically, and now often has support for emerging hardware standards before Windows.
Microsoft Windows NT was designed to be Microsoft's answer to DEC VMS and UNIX, though Microsoft had earlier attempted to write their own UNIX varient called Xenix (later sold to SCO). Windows NT and Linux have become the engines which are causing the slow collapse of UNIX.
This discussion does not attempt to discuss the BSD's and their role in this process.
What makes UNIX vulnerable?
As mentioned before UNIX vendors have generally sold vertically integrated solutions, and there is a large issue of economy of scale in the software industry. Therefore, selling a lower-volume solution is not likely to be successful of a higher-volume solution exists which is good enough.
As Linux and Windows NT have matured and become both more stable and more scalable, they have become good enough for a range of applications which were previously the domain of UNIX, Netware, and VMS. These operating systems have suffered notably and have become much less profitable. Additionally, the cost has gone up. Price increases combined with margine decreases is not a sign of long-term viability. As can be expected, market shares have dropped substantially, and are continuing to drop of every year, according to the IDC.
UNIX Vendor Reaction
I think it is clear that most vendors are aware of the problem and are seeking solutions. For example, IBM has becoming increasingly vocal regarding their aim of replacing AIX with Linux in such a way as to avoid leaving their customers stranded. SGI seems to be pursuing a similar strategy.
Sun, on the other hand is trying to win Linux customers by offering interoperability but are trying to lock customers into their operating system. They are, however, conceding lower-end systems to thei rival and offer low-end servers running Linux. Of the major vendors, they are the only which does not seem to be pursuing a strategy of migrating customers to the commodity solution.
The SCO Group (formerly Caldera Linux) has actually moved the other direction. They have stopped selling Linux, sued various Linux contributors and users under a variety of claims (all with little success) and continued to sell OpenServer and other products. However, there is no indication that they will ever become profitable, and the IBM countersuit casts dark shadows over most of their continued operations.
Winners and Losers
I expect that Linux vendors and the hardware vendors that support them (particularly IBM) will be the large winners. I expect Sun and SCO to be the immediate losers. Perhaps the BSD varients will be winners as well. In the end, this struggle will lead to a more direct and heated struggle between Linux and Microsoft Windows (NT-based). Stay tuned!