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Server market shows signs of life

News
Dec 01, 20032 mins
Computers and PeripheralsIBMLinux

After two years of contraction the worldwide server market is growing again, according to the latest figures from IDC.

Server revenue for the third quarter grew by 2% compared with the same period a year earlier, says Mark Melenovsky, program director in IDC’s server group. Worldwide server revenue, which includes the costs of server hardware, operating systems and initial storage shipments, reached $10.8 billion, up from $10.6 billion in the year-ago quarter.

Measured by the number of units shipped, the server market grew by 19.5%, led by strong sales of servers based on processors from Intel and Advanced Micro Devices, IDC found.

“This is a good sign and, I think, a sign that spending for enterprise IT is on a growth target,” Melenovsky says. He predicts that the market will grow by 2% or 3% year-over-year next quarter, and that server sales for 2004 would increase by about 5% over 2003.

IBM retained its lead of the server market, with a 31.1% market share on revenue of $3.4 billion. HP was second, with 27.7% on $3 billion in revenue, followed by Sun and Dell, with 10.8% and 9.5% of the market, on sales of $1.17 billion and $1.03 billion, respectively.

IBM extended its lead over HP slightly by posting strong growth in all its server lines, he says. The company’s server revenue increased by 6.6% year-over-year. Its pSeries Unix systems did particularly well, bucking an industry trend and growing by 2% in a Unix server market that shrunk by 3.8% overall. The gains were due in part to a wide-ranging refresh of IBM’s pSeries servers, many of which were upgraded to Power4+ processors this year.

Sun was hardest hit by the decline in Unix spending. Its market share dropped by 9.3% from the same quarter in 2002. Strong growth in the Linux market, which grew by 50%, took its toll on Sun. Linux systems sold particularly well in high-performance computing clusters as well as the Web infrastructure market, and did not appear to be affected by The SCO Group’s claims of intellectual property violations in the Linux operating system, he says.

Windows server sales also grew at a respectable pace, increasing by 10% from the previous year, Melenovsky says. “There are a lot of systems that were bought in 1999 or 2000 that are . . . being replaced,” he says.

When measured by the number of units shipped, Windows remained far ahead of Linux, with 841,000 Windows servers shipped in the quarter, compared with 210,000 Linux boxes, Melenovsky says.

McMillan is a correspondent with IDG New Service’s San Francisco bureau.