Nov 24, 2004 (10:11 AM EST)
Server Market Grows 5.5%; Linux Revenue Tops $1 Billion

Read the Original Article at InformationWeek

The worldwide market for computer servers has posted its sixth consecutive quarter of growth, as revenues from Linux servers topped $1 billion in the third quarter and IBM and Hewlett-Packard Co. captured the No. 1 spots for revenue and unit shipments, respectively, a market research firm said Wednesday.

Factory revenue rose in the September quarter 5.5 percent, compared with the same period a year ago, to $11.5 billion, International Data Corp. said. Unit shipments increased by 18.7 percent.

Low-cost servers running x86 processors drove the market both in revenue and shipments, as companies continued to update and expand their information technology infrastructures, IDC said.

"Although customers continue to target data center simplification initiatives, investment in strategic IT initiatives, including new workloads, are also growing significantly once again," IDC analyst Matthew Eastwood said in a statement.

Servers running the Linux open-source operating system posted the ninth consecutive quarter of double-digit revenue growth, increasing 42.6 percent to capture 9.2 percent of the overall market and surpass $1 billion for the first time. HP remained the leader in the Linux market with a 26.9 percent market share, followed by IBM, 20.5 percent; and Dell Inc., 17.4 percent.

Low-cost, or volume, servers, which include Windows and Linux on x86 processors, represented the primary growth engine, posting an 18.2 percent revenue increase, IDC said. Revenues from midrange servers declined 10.2 percent, as companies migrated to volume servers. High-end servers recorded a 1.9 percent increase, reflecting renewed spending among large companies.

Revenues from servers based on Microsoft Corp.'s Windows operating system increased 13.3 percent to $3.9 billion, accounting for 33.9 percent of the overall market. Unix servers posted a 2.3 percent revenue decline from a year ago to $4 billion.

The market also showed accelerated adoption of servers powered by 64-bit x86 processors, reflecting a movement away from 32-bit servers, IDC said.

The market for blade servers gained 22.5 percent in the quarter to $287 million, and is on pace to top $1 billion, IDC said. Blades are low-cost servers that plug into a rack that's designed to make it easy to swap or add servers.

In terms of revenue, IBM led the pack with $3.7 billion, or 31.7 percent of the market. HP, which was No. 1 in unit shipments, was second in revenue with $3.1 billion, or 26.8 percent of the market; followed by Sun Microsystems Inc., $1.18 billion, or 10.2 percent; Dell, $1.17 billion, or 10.1 percent; and Fujitsu/Fujitsu Siemens, $714 million, or 6.2 percent. All the vendors increased revenues in the quarter, with Sun posting the lowest at 0.1 percent, and Dell the highest at 14.1 percent.