Server Sales on the Rise

Friday Mar 12th 2004 by ServerWatch Staff
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Server revenue stats for 2003 from Gartner and IDC show a server market that continues to rebound. IBM was the big winner, while Linux continues to build momentum.

Server revenue stats for 2003 from Gartner and IDC revealed a server market that continues to improve. Strong performances from IBM, Dell, and HP revive what had been a sluggish server market for the past few years.

Highlights from the survey results, which were more alike than different, put IBM back in the top spot and noted Linux as the fastest growing server segment.

Among the minor differences between the numbers from the research firms was total revenue. IDC reported server sales rising to $13.7 billion. Gartner pegged them at $13.4 billion. But both studies iterated server sales showed growth during the past three consecutive quarters. And all major categories grew, for the first time since 2001, according to IDC.

In terms of overall performance, IBM snagged the top spot in both surveys. Gartner reported that Big Blue's revenue grew by $1 billion to total $14.8 billion, a 10-percent increase. Overall, IBM's total server market share grew 1.7 percentage point to 32 percent.

IDC had IBM with 37.9 percent market share and a growth rate of 17.7 percent, compared to the fourth quarter of 2002. IDC noted that this growth was partially driven by a 33 percent jump in its OS/390 unit.

HP and Dell Rise While Sun Sinks Further
HP's steady performance earned the vendor a second-place spot from both Gartner and IDC. According to Gartner, revenue improved 5 percent from $11.9 billion to $12.5 billion. IDC reported HP had a 25.8 percent share, with revenue growth of 9.4 percent compared to the fourth quarter of 2002.

Whether you go by Gartner's 22 percent or IDC's 19 percent revenue growth, Dell had the most explosive growth of any vendor. However, its nearly $4 billion in sales accounts for only 8.6 percent of the server marks, leaving it the smallest of the top four server vendors.

Amid this sea of gains, Sun, embattled on several fronts by tough competition and what analysts report as questionable business decisions, declined in the both surveys. In IDC's study it dropped 1.7 percent to a 10.4 percent revenue share. Based on Gartner's findings, it dropped 15 percent for the same period. The vendor saw its market share dip from 14.6 percent to 11.8 percent over the same period.

Continued on Page 2: Server Sales by Operating Systems

Continued From Page 1

Server Sales Broken Down by Operating Systems
Gartner also broke down vendor results for Intel-, Unix-, and Linux-based servers. While still billions behind mainstay Unix and Intel machines in sales, Linux-based system sales experienced volcanic growth, as many analysts had predicted.

In the past few years, HP, IBM, and Dell — after investing billions in marketing and research and development to bring products to market — have proven that Linux can be viable in enterprise computing space after investing billions in marketing and research and development to bring products to market. Customers have begun to believe the fanfare and are buying systems based on the open-source operating system at a prodigious clip.

According to Gartner, IBM and HP tied for a 60 percent growth in Linux system sales. However, HP enjoyed the most success in this sector with system revenue growing from $581 million to $927 million from 2002 to 2003. IBM grew from $345 million to $552 million year-over-year.

Dell, on the strength of its Microsoft Windows-based systems, led the way with 22 percent sales growth for Intel-based systems. IBM and HP followed with 21 percent and 17 percent growth, respectively. Overall, HP continued to dominate this segment with a nearly 34 percent share.

IDC's Worldwide Quarterly Server Tracker reported similar findings. It showed a 63.1 percent year-over-year growth for Linux servers, generating $960 million for the industry in the last three months of the year.

The results show "that Linux servers are taking on important roles in IT customers' computing infrastructure," Jean S. Bozman, an IDC research vice president, said in a statement. "What began with edge and Web-centric workloads is branching out to include [high-performance computing] and commercial workloads."

The IDC report also shows significant gains in the x86 server market, with revenue up 15 percent and unit shipments up 23 percent. Windows OS servers continue to grow as well. IDC said Windows servers accounted for 31.7 percent of quarterly server market revenue or $3.9 billion in the fourth quarter.

Unix servers sales, which many analysts believe are being cannibalized by the explosive Linux system growth, posted the least success in both surveys. Although Unix holds fast as the most prevalent and highest revenue generating server technology. IDC said the lumbering OS giant posted its first year-over-year growth in 11 quarters with revenue growth of 0.8 percent to $5.1 billion for the quarter. Gartner reported Sun and HP saw sales for these machines dip 16 and 4 percent, respectively. IBM, however, bucked the trend saw a 13 percent revenue increase for its pSeries servers.

Two stories that originally ran on internetnews.com. were used in this report.

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