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Sun's server sales soar, while Dell bores in Q2

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Return to 2000 Slap me and call me Susan - or maybe Tom. Sun Microsystems has gained server market share two quarters in a row.

Yes, we've hacked into an old Audrey to write this story and ordered some toothpaste on Pets.com because it feels like 2000 all over again. Okay, okay. Not quite a full-blown 2000. More of a neutered, Ambien over Ritalin version where decent market share gains do as much for you as obliterating the competition used to.

[Focus - Ed.]

Sun Microsystems stood out during the second quarter as the only vendor to grow its server revenue by double-digits. Sun picked up $1.6bn worth of sales - a rise of 14 per cent year-over-year, according to fresh figures from Gartner. That means that Sun outperformed its first quarter run when it grew sales by 8 per cent.

You may want to slap yourself at this point and make sure this isn't a dream. The last time Sun gained meaningful server market share two quarters in a row it was suing Microsoft and bullying IBM.

And Sun's gains don't seem to be a figment of Gartner's imagination. Rival IDC, for example, showed Sun with a 16 per cent year-over-year revenue gain to $1.6bn in sales. Of course, you can only put so much faith in IDC's server Oracle at Framingham.

Why focus so much on Sun? Well, the second quarter was mostly an uneventful dud without the kids from the Santa Clara asylum.

Overall, server shipments increased 13 per cent during the second quarter with all vendors working together to ship 2m units. That led to a 2.5 per cent rise in sales and a worldwide server market at $12.4bn. Smaller systems continued to dominate growth with x86 and blade servers proving popular during the quarter.

IBM remained the server king but did so in unimpressive fashion. IBM's sales fell 2 per cent to $3.6bn. HP's sales fell 4 per cent to $3.4bn, and Dell's sales fell 2 per cent to $1.3bn, according to Gartner. Fujitsu/Siemens was the only vendor besides Sun to register a sales spike with revenue jumping 8 per cent to $562m. All hail the SPARC vendors.

When looking at shipments, HP is top the vendor followed by Dell, IBM, Sun and Fujitsu. All of the major vendors enjoyed double-digit shipment growth except for - you guessed it - Dell. Shipments in Round Rock rose just 2 per cent, while the other Tier 1s saw shipments jump between 12 and 14 per cent, Gartner said. All hail Opteron.

Sun's fortunes have been boosted by strong sales of its Opteron-based servers and higher than expected interest in its UltraSPARC T1-based servers. The company's focus on energy-efficient servers looks like the right call given current trends in the marketplace.

IBM Fellow Bernard Meyerson told the crowd at the Hot Chips conference yesterday that he expects a power crisis of sorts to occur in the server market come 2007. That's when the overall cost of powering and cooling all the servers in the US will outpace the amount of money spent on new servers.

Meyerson urged server vendors and customers to focus on well designed "systems" as opposed to concentrating on buying "cheap" gear with the latest and greatest processors. Such a pitch, even coming from IBM, plays right into Sun's strategy and continues to do damage for a company like Dell. ®

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