Server vendors work hard for their money in Q1

Units fly, cash putters

By Ashlee Vance in Chicago • Get more from this author

Posted in Servers, 26th May 2004 20:28 GMT

Free whitepaper – Selecting an Industry-Standard Metric for Data Center Efficiency

The number of servers shipped in the first quarter surged, but unfortunately for the vendors overall revenue did not move with equal vigor.

Close to 1.6 million servers were moved worldwide in the first quarter, according to research firm Gartner. That's a 27 percent leap over the 1.2 million units shipped in the same period last year. But while HP, IBM, Sun Microsystems and Dell managed to keep the loading docks busy, they were not able to do as much for their piggy banks.

The vendors posted $11.8bn in revenue for the quarter, which compares to $10.8bn last year and equals a 9 percent year-over-year rise. As has been the trend for about three years, customers bought far more low-end systems than high-priced SMPs.

"Much of the revenue growth in the server industry was driven by the low-end products, such as servers costing less than $5,000," said Michael McLaughlin, principal analyst for Gartner.

IBM continued to show overall strength in the market. Big Blue held onto the top spot in overall revenue with $3.6bn in sales - up 16.7 percent. HP's sales grew just 6.2 percent to $3.1bn. A 12.5 percent revenue decline for Sun has put it a neck-and-neck competition with Dell for third place in revenue. Sun sold $1.2bn in servers in the second quarter, while Dell, which grew 24.8 percent, sold $1.17bn.

While it does not lead in revenue, HP does lead in units shipped, moving 431,000 servers - 21 percent more than last year. Dell had the second highest volume at 344,00 - a stunning 38 percent rise. IBM came in third with 232,000 on a 27 percent increase, and Sun came in fourth with 77,000 servers shipped. The good news for Sun was that volumes rose 27 percent, which likely means some of its low-end bets are paying off. ®