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Life support kicks in for server makers in Q2

IBM surges, Sun stunted

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The worldwide server market is recovering but in the most modest of proportions.

In the second quarter, server revenue rose 0.2 percent year-on-year to $10.6 billion, IDC said. This slight gain is significant in that it corrects a nine-quarter worldwide revenue decline. It is, however, hardly enough of an uptick to declare a recovery in the hardware business just yet.

Shipments jumped a whopping 17.5 percent in the quarter to more than 1.2 million units, according to IDC. The large rise in units on relatively flat revenue points to an ongoing trend in the market where customers are buying smaller, less-expensive systems. In addition, midrange servers have declined in price over the past two years.

IBM outperformed rivals in the second quarter, regaining its position as the number overall server vendor and making a large leap in revenue. IBM now holds 30.4 percent of the market versus HP's 27.7 percent share. Sun Microsystems takes the third spot with 13.5 percent share, followed by Dell at 9.2 percent and Fujitsu Siemens at 2.7 percent.

IBM kicked server revenue up to $3.23 billion by growing sales 10.12 percent in the quarter. HP was flat with $2.95 billion in sales. Sun had one of its worst quarters in recent memory, coughing up 3.1 points of market share and seeing revenue decline by 18.69 percent to $1.434 billion. Dell and Fujitsu Siemens both enjoyed ten percent revenue growth.

For the first time, x86 servers using Intel and AMD chips outpaced RISC servers in revenue. The x86 market grew 10.7 percent to $4.46 billion versus a 5.2 percent drop in RISC sales to $4.33 billion.

HP is the leading Intel server vendor with 33.1 percent of the market. It beat rivals in Windows, Linux and blade server shipments.

Sun regained its position as the top Unix vendor, holding 33 percent of the market. HP owns 31.4 percent and IBM follows with 24.6 percent share. IBM, however, showed a large surge in revenue, pointing to a continued recovery in its Unix business.

Linux servers far outpaced Windows systems in sales and shipment growth. Linux server revenue jumped 40 percent to $650 million and shipments rose 42 percent. Windows server revenue grew 11.5 percent and shipments rose 21.7 percent.

These trends point to a nice amount of diversity in the server market. Unix servers continue to take up most of the enterprise sales, while Windows and Linux boxes split up the Web and application serving markets. Blade servers have also hit a new high at $100 million in revenue, confirming their increased role in the market.

It's no longer a battle between Unix and Windows only at the top or between RISC and Intel only. AMD's Opteron chip is coming on with some decent high performance computing wins and should be expected to take up an increasing part of the market. ®

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