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Server price-lash

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Unix Decline

Drilling down a little bit into the numbers, Gartner said that in the ever-popular and usually profitable RSIC-Itanium/Unix server space, shipments were down 16.1 per cent to 86,646. This is 16,613 boxes that didn't get sold to stay at the baseline set in Q3 2007. All the Unix vendors saw shipment decline - except NEC, which has a tiny share but saw its shipments nearly triple to 285 boxes. HP and Fujitsu had the biggest Unix server shipment declines, according to Gartner, with boxes sold in Q3 down 24.2 per cent and 36.6 per cent, respectively. IBM had an 11.9 per cent shipment decline, and even Sun, which has been getting a little more traction lately, had an 8.3 per cent decline in its Unix server sales.

The Unix space accounted for $3.36bn in sales worldwide in the third quarter of 2008, about 26.4 per cent of total revenues. And because Big Blue has been selling a lot of big Power Systems machines, the company is the clear revenue leader in Unix - something that would have seemed impossible back in February 1990 when IBM launched the RS/6000 as a second-rate Unix vendor with big aspirations to take on HP and Sun. IBM had $1.2bn in Unix server sales in the quarter, reckons Gartner, compared to $963.8m for Sun and $923.9m for HP. The Fujitsu-Siemens partnership accounted for just under $146m in Unix sales in Q3, declining 35 per cent and dragging the market down bigtime.

If Sun and Fujitsu-Siemens had already merged - and assuming no revenue overlap between the two companies - the combined company would have $1.11bn in Unix server sales.

The x64 chip is what drives both server volumes and server revenues these days, and these kinds of boxes, which mostly run either Windows or Linux, accounted for $7.15bn in sales in the quarter, down 6.6 per cent by Gartner's numbers. x64 server shipments were up 5.5 per cent in the quarter to 2.22 million units. If you do the math, the average selling price (ASP) of an x64 box fell by 11.5 per cent in the quarter to $3,217. HP's ASPs in the x64 space fell more, by 13.2 per cent, but the company's average price was higher at $3,606 too, so it wasn't all bad.

Dell, which sells a lot of low-end boxes directly to small and medium businesses, saw its ASP for x64 boxes (the only kind it sells) fall by only 8.2 per cent, but the company's ASP dipped a few bucks below $3,000. IBM took the biggest ASP hit, falling by 16.9 per cent. But because IBM tends to sell fatter x64 boxes, that ASP was nonetheless higher at $4,025. Still, IBM took the biggest revenue hit on ASPs, and that is why its sales were down so much in the quarter. SMP boxes that can deliver 8 or 16 cores are getting cheaper, and that puts pressure on all x64 boxes and drags down Unix and proprietary revenues too.

Basically, the server business is about as friendly as the global car business. The big difference: Americans aren't a worldwide joke in the server biz. ®

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