Server Market Grows in Q3By Scott Ferguson | Posted 2006-11-22 Email Print
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Updated: Reports by IDC and Gartner show the server market improving in the third quarter with help from sales of blades and high-end servers, despite the impact of virtualization technology.Separate reports from research firms IDC and Gartner point to a more robust market for servers in the third quarter of 2006. This renewed corporate interest in servers reflects the growing popularity of blades and demand for high-end hardware, according to the reports.
Overall, server revenue climbed 9.1 percent from a year ago and reached $13 billion, according to a Gartner study released Nov. 21. At the same time, shipments reached 2.2 million units, an increase of 4.4 percent in the third quarter.
The IDC report, released Nov. 22, showed that the server market grew 3.5 percent to about $12.9 million in revenue during the third quarter. Specifically, the demands for blades grew 29.9 percent.
Gartner and IDC both reported that the emergence of virtualizationthe ability to run multiple applications and operating systems on a single serverslowed demand for servers.
Jeffrey Hewitt, a research director at Gartner, said that while the numbers were a good sign for the server marketplace, those results could have been higher if not for the effect of virtualization. "Still, it was not a bad quarter if you consider that," he said.
In the IDC report, researchers wrote, "Virtualization continues to drive slower growth in the volume server market" with spending increasing by a modest 3.8 percent this quarter. This is the fourth consecutive quarter of single-digit growth and the slowest growth since the third quarter of 2002, the study found.
In terms of worldwide shipments of servers, HP led the market with 540,609 server shipments in the third quarter. This accounted for 26.5 percent of the market, compared with 27 percent at the same time last year, according to the Gartner survey.
HP's server shipments grew 7.2 percent from the third quarter of 2005. Dell held the second spot on the Gartner list with 459,950 shipments and 22.5 percent of total shipments. IBM took the third spot with 332,777 shipments and 16.3 percent of total shipments. Sun and Fujitsu held the fourth and fifth spots respectively, the Gartner study said.
The Gartner study also found that blade and x86 servers continued to dominate the space, while RISC-Itanium Unix server shipments fell 6 percent. However, the revenue from RISC-Itanium Unix servers increased slightly, by 0.6 percent.
IBM saw the revenue increase for almost every server product it produced, while shipments of blades increased by 42.6 percent in the quarter. Gartner's Hewitt said IBM, while not selling as many units, was able to get customers to buy more of its high-end servers, such as the company's System Z mainframe offerings.
For HP, only its ProLiant blades saw an increase in shipments worldwide, of about 8.4 percent. The rest of the company's products saw a drop in shipments during the quarter, according to the Gartner study.
Sun had a good quarter, with a 24.7 percent increase in its revenue and a 6.4 percent increase in shipments. Dell also saw more than a 10 percent increase in both its shipments and its revenue.
IDC said revenue for high-end servers grew 9.1 percent, while revenue for more midrange models dropped by 2.3 percent. Unix servers declined by 1.7 percent in terms of revenue.
In the x86 market, Advanced Micro Dynamics, which has basked in the glow of a string of announcements from OEMs that they would adopt Opteron processors in their server lines, saw its revenue increase nearly 80 percent and captured nearly 20 percent of the market.
Intel also gained market share in the x86 realm. It was the first time in four years that it had showed some gain and the company now holds about 80 percent of the market, according to IDC. Revenue from Itanium-based systems grew by 23.8 percent.
In the IDC report, researchers wrote that the introduction of the Woodcrest processor helped Intel regain its position in the x86 space. The new processors are designed to improve power consumption and work with virtualization software.
Like Gartner, IDC placed HP as the No. 1 shipper of servers in the third quarter. In that area, HP held 28.8 percent of the market and saw its shipments increase by 7.6 percent. Dell placed second with 24.6 percent share of the shipment market, a 23.9 percent increase from last year.
IBM was No. 1 in the blade market with 42.3 percent market share, followed by HP with 35 percent, according to IDC.
Editor's Note: This story was updated to include analysis from IDC.
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