Aug 25, 2005 (01:08 PM EDT)
Gartner Says Server Market Grows, But Sun Stumbles

Read the Original Article at InformationWeek

The overall server market showed reasonable growth in the second quarter, but Sun Microsystems Inc. failed to keep pace with the other top three vendors, posting a decline in revenues, a market research firm said Thursday.

The worldwide market increased in the quarter ended June 30 by 4.7 percent to $12.2 billion, compared with $11.6 billion for the same period a year ago, Gartner Inc. said.

Despite the lift in the market, Santa Clara, Calif.-based, Sun saw its revenues drop by 4.5 percent from a year ago to $1.5 billion. The company's overall market share fell to 11.94 percent from 13.09 percent a year ago.

"They continue to lose market share due to the fact that they don't have a broad product line like their competitors," Gartner analyst Michael McLaughlin said.

Armonk, N.Y.-based, IBM, the market leader, kept pace with the overall market, posting a 4.6 percent spurt in the quarter to $3.7 billion and a 30.48 percent market share. No. 2 Hewlett-Packard Co., based in Palo Alto, Calif., grew its revenues year-to-year by 11.9 percent to $3.5 billion, or a 27.17 percent share.

No. 4 Dell, based in Round Rock, Texas, continued to take advantage of the growing market for x86-based servers, posting an 18.5 percent jump to $1.3 billion and 11.06 percent of the market.

"(Dell) is positioned in a market that is rapidly going to grow," McLaughlin said.

That market is the shift two one- or two-processor machines running x86 operating systems, the analyst said. Rather than buy expensive, but powerful, multi-processor machines sold by companies like Sun, corporations are buying cheaper x86 machines that they can tie together with management software.

X86 machines account for about 70 percent of the server market today, and that number is expected to increase to 80 percent by the end of the year, McLaughlin said.

IBM has held on to its top position through its broad offering of servers in every category from Unix and X86 to mainframes. HP, which stumbled a year ago due to supply chain problems that led to the firing of several executives, appeared back on track with chief executive Mark Hurd, who replaced Carly Fiorina this year.

"They've turned that around, and they've gotten back into the swing of things," McLaughlin said.