Server shipment increases but virtualization continues to slow new server sales

Opinion
Aug 29, 20062 mins

* IDC releases Q2 server market share figures

IDC announced its server market share figures last week. Server factory revenue grew almost 1% to $12.3 billion in the second quarter of 2006. IDC says server factory revenue represents those dollars recognized by multi-user system and server vendors for industry standard servers and upgrade units sold through direct and indirect channels.

Unit shipment growth grew 8.3% year over year, the eighth consecutive quarter of slowing overall shipment growth. Although there was growth in the volume server segment – those servers under $25,000 – new server sales are slowing due to the use of server virtualization in customer organizations.

X86 server revenue grew 6.2% year over year – it is the strongest and only growth segment for the server market, according to IDC. X86 server market grew 3.3% in the quarter to $5.9 billion worldwide.

The midrange enterprise server segment – represented by servers costing $25,000 to $499,999 – shrunk by 3.5%. High-end enterprise servers – costing $500,000 or more – declined by almost 7% year-over-year.

Linux servers, which grew by 6.1% to $1.5 billion, now represent 12% of all server revenue. Sales of Unix servers declined in revenue by 1.6%. Windows servers now represent a $4.2 billion market or 34.2% of factory revenue. Itanium systems also grew by 36% year-over-year – they now represent 11.7% of non-x86 server revenue.

AMD Opteron-based servers accounted for 20.2% of the x86 servers sold.

Of the systems manufacturers, here is how they stacked up according to IDC:

* IBM was the leader in all server systems with a 31% by revenue market share, while HP held the No. 2 spot with 27.8% share.

* Sun’s market share grew to 12.9% surpassing Dell, which accounted for 10.3% of revenue-based market share. IDC attributed Sun’s growth to revenue from UltraSPARC-based systems and its AMD Opteron-based servers.

* The No. 5 slot was taken by Fujitsu-Siemens.

* HP was No. 1 in shipments with 30.5% market share; the company led Dell with 23.8% share.

Blade servers grew in revenue by 37.1% year-over-year and accounted for $639 million in the second quarter. They still only represent 5.2% of the server market revenue. Not surprisingly, IBM and HP tied for revenue with 39.5% and 38.9%, respectively.