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The worldwide server market is growing again following two years in the doldrums, largely thanks to a surge in sales of lower-end kit.

The server market revenue grew two per cent in Q303 with factory revenues reaching $10.8 billion, according IDC figures published today. The results are a full percentage point higher than the analyst expected. The figures mark the second consecutive quarter of positive growth for server revenues worldwide, following nine quarters of decline during the economic downturn.

But don't go getting too excited.

Vernon Turner, group vice president of IDC's Worldwide Server Group, cautioned that two quarters of positive growth "do not necessarily mean that a long-lasting economic rebound is in place."

Overall, server unit shipments grew dramatically by 19.5 per cent, reflecting a demand for volume servers, which IDC defines as small servers priced at less than $25,000. Revenues derived from the sales of x86 servers (servers based on Intel and AMD microprocessors) grew 8.3 per cent and unit shipments expanded 21.4 per cent.

Volume server revenue growth of 9.5 per cent year-over-year, according to IDC. Sales of midrange enterprise servers ($25,000 to $499,999) grew seven per cent year-over-year, and high-end enterprise servers (priced $500,000 or more) declined in revenue by 14 per cent year-over-year.

IDC reckons tighter IT budgets are driving the market towards server deployments involving volume servers.

Winners and losers

IBM held onto top spot in the worldwide server systems market with 31.1 per cent market share in factory revenue, gaining 1.4 points of share year-on-year. HP took second place with 27.7 per cent share, gaining 0.4 points of share year-on-year.

Meanwhile the gap between Sun and Dell continued to close with Sun gained 10.8 per cent revenue share, while Dell's share reached 9.5 per cent, a sixth consecutive market share gain. Last of the big five was Fujitsu Siemens, whose share dipped from 6.6 per cent in Q302 to 6.3 per cent in Q303.

SCO's legal threats fail suppress Linux growth

Linux servers generated $743 million in Q303, a 49.8 per cent growth in factory revenues over the last 12 months. Windows servers accounted for $3.4 billion in 3Q03, up 10.3 per cent year-over-year.

By contrast, Unix server revenues were $4.1 billion in 3Q03, down 3.8 per cent. ®

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