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Windows server revenue outpaced Linux in Q4

Perfect storm plays out

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In Gartner's assessment of the server market in the fourth quarter of 2009, X64 servers and blades in particular were singled out as the growth engines. With IDC's similar, but different, report Thursday we learn that the Windows platform was the real beneficiary of the bump in sales.

IDC tracks factory revenues by the server manufacturers, while Gartner tracks revenues that add vendor and reseller sales together. So their numbers are never quite the same. But they are similar, and they track. Gartner talks about sales by X64, RISC, and Itanium processors, while IDC looks at server sales by the primary operating system deployed on the boxes.

IDC also gives a breakdown of sales by server price band (volume, midrange, and enterprise), and talks a bit about the X64 market and blades. By using both sets of publicly available data, you get the best sense of what is going on with servers short of paying Gartner and IDC the big bucks the vendor community does.

With IDC's way of looking at the server world, server revenues worldwide (as reckoned in US dollars regardless of where they were sold) were down 3.9 per cent to just under $13bn in the final quarter of 2009.

IDC reckons that 1.9 million units shipped out of vendor factories (this is not the same thing as the number of servers sold to customers since there is some inventory in the channel), an increase of 1.9 per cent compared to Q4 2008. For the full year, IDC believes worldwide server shipments were off 18.6 per cent, to 6.6 million units, and aggregate revenues mirrored this, with an 18.9 per cent decline to $43.2bn in sales.

As El Reg reported yesterday, Gartner calculates that 2.23 million boxes were sold in the fourth quarter of 2009, actually an increase of 4.5 per cent from a pretty awful Q4 2008, and that revenues nonetheless fell by 3.2 per cent to $12.6bn.

For the year, Gartner says server shipments dropped by 16.6 per cent, to 7.56 million units, and revenues fell faster, down 18.3 per cent to $43.1bn. Presumably the extra 960,000 servers that Gartner says were sold compared to IDC were machines that were stuck in the channel from late 2008 when the economic meltdown began.

"Market conditions improved significantly in the fourth quarter as the marketplace transitioned from recent stability to growth in several critical server segments," said Matt Eastwood, group vice president of IDC's enterprise server group, said in a statement accompanying the figures."

"Customers are actively re-evaluating their IT needs and refreshing their infrastructures, and the fourth quarter represents the beginning of a market inflection. While many customers sat on the sidelines during 2009, significant innovation continued as server vendors prepared for an expanding market opportunity in 2010 and beyond.

He continued: "Optimal conditions for market inflection occur only once a decade and IDC believes that market shares could shift dramatically as the winners and losers of this new market cycle are determined, with those who are best positioned to meet increasingly sophisticated IT needs across the market gaining share."

So it looks like Oracle and Cisco Systems are hopping into the server racket at just about the right time, eh?

Volume play pays

The volume server segment, which encompasses machines that cost under $25,000, had a 9.9 per cent revenue bounce in the fourth quarter. This segment is almost entirely comprised of X64-based servers, and the lion's share of them run Windows as their dominant operating system. Midrange boxes, which cost between $25,000 and $250,000, which include high-end X64 machines as well as RISC/Itanium servers sporting Unix and proprietary operating systems as well as some mainframes, experienced a 5.3 per cent decline in Q4 2009.

And thanks to stalling big iron machines based on Itanium, RISC, and mainframe processors that sell for more than $250,000, the high-end segment of the server space had a 23.6 per cent decline in the final quarter of the year.

For the past five quarters, the midrange and high-end markets have been losing steam, and this is the first quarter where any segment actually gained some steam. And predictably, given the economics and the improving features on X64 iron, the volume segment was the first part of the server arena to recover.

And, perhaps it will be the only part of the server market to recover. We'll see.

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