Features

Server Market Grows Moderately as Sun Jumps to No. 3

By Sophia Mayengbam

The factory revenue in the worldwide server market in the second quarter has shown a slight improvement with 0.6 percent year over year to USD 12.3 billion with IBM maintaining its number 1 position. Sun Microsystems emerged as a significant gainer in the quarter replacing Dell from the third position.

The study by IDC found that demand in the U.S. and Asia/Pacific (excluding Japan) led to positive results in these markets, with year-over-year growth of 3.6% and 2.6% respectively, while weaker results in EMEA and Japan brought down the overall growth rate.

According to IDC volume server revenue grew 6.2% year over year and continues to represent the only growth segment for the server market overall. This was the third consecutive quarter of single-digit growth for the volume server market.

IDC found that the mid-range server revenue grew 3.5 percent while the high-end enterprise server market declined 6.9 percent year over year. This is the seventh consecutive quarter of reduced spending on the high-end segment.

"Technology innovation continues to influence server deployment decisions and drive changes in acquisition patterns across the industry," said Matt Eastwood, program vice president of Worldwide Server Research at IDC. "Enterprises continue to deploy both scale-up and scale-out server configurations as part of their core IT strategy. As evidence of this trend, 1-socket and 32-socket+ configurations grew sharply in the second quarter while all other configurations experienced a year-over-year revenue decline as multi-core processors enable 1-socket systems to cannibalize workload from traditional 2-socket systems."

Although IBM maintained its position in the number 1 position with 31% market share, its revenue declined a 2.2% year-over-year. HP also continued to hold its number 2 position in terms of factory revenue with 27.8% share, while its revenue slipped 1.7% compared with the year-ago quarter.

Contrasting these the two leaders of the market, Sun, which climbed to the third position replacing Dell, gained significant market share for the second consecutive quarter with 15.5% year-over-year revenue growth in the quarter with an increase in its overall market share to 12.9% from 11.2% in 2Q05.

"Sun continued its strong server revenue performance in consecutive quarters and regained the number 3 overall market share position," said Steve Josselyn, research director, Enterprise Server research at IDC.

Sun, which lost its ground to rival, has been able to climb up because of its UltraSPARC-based systems. "The clear majority of Sun's server revenue is generated from UltraSPARC-based systems, but the growth in the company's Opteron-based products are having a positive impact," said Josselyn.

Dell fell back into the number 4 position with 10.3% revenue-based market share in 2Q06. This represented a 1.3% decline in revenue and a loss of 0.2 points of market share overall. Fujitsu/Fujitsu-Siemens maintained its number 5 standing in terms of factory revenue, with 4.5% market share in the quarter.

IDC said that the x86 server market grew 3.3% in the quarter to USD 5.9 billion worldwide, its slowest growth rate in eleven quarters. Unit shipment growth also continued with a moderate gain of 9.8% to 1.68 million servers as customers continued to consolidate their IT infrastructures.

IDC said that x86 server segment growth has been tempered by the introduction of technologies such as virtualization and dual-core into the x86 server space. Enterprises are employing these technologies to increase the efficiency of their installed server systems, rather than deploying new systems.

The server blade market showed continued growth in the quarter, with factory revenue gaining 37.1% year over year and shipments increasing by 29.7% compared to 2Q05. IDC said that IBM and HP finished the quarter in a statistical tie for the number 1 spot in the server blade market with 39.5% and 38.9% revenue-based market share respectively.


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