Sun Sees Server Revenue Jump in Q2

By Jeffrey Burt  |  Print this article Print


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The systems maker jumps over Dell to regain third place in market share, says analyst firm IDC.

Sun Microsystems, which has been undergoing a drastic realignment of its server business over the past couple of years, in the second quarter regained its position as the world's third-largest systems maker, overtaking rival Dell.

The Santa Clara, Calif., company saw its market share increase to 12.9 percent in the second quarter, according to numbers released by analyst firm IDC, of Framingham, Mass.

In the second quarter of 2005, Sun's market share stood at 11.2 percent.

In addition, Sun was the only one of the four top server makers to see growth in its revenues. The company's server revenues grew 15.5 percent year to year. IBM, Hewlett-Packard and Dell saw revenue declines of between 1.3 and 2.2 percent.

"Sun continued its strong server revenue performance in consecutive quarters," analyst Steve Josselyn said in a prepared statement. "The clear majority of Sun's server revenue is generated from UltraSPARC-based systems, but the growth in the company's Opteron-based products [is] having a positive impact."

Sun until two years ago had long shunned the x86 space in favor of its own RISC-based SPARC line. In a turnabout, Sun adopted Advanced Micro Devices' Opteron processor as the basis for a new line of x86 systems and has aggressively grown out its product line.

In July, Sun added to its line of Opteron-based Galaxy systems, introducing a blade server and a system than can scale to 16 processors.

"We have our foot firmly on the accelerator and are leaving our competitors in the dust," John Fowler, executive vice president of Sun's systems group, said in a statement. "Over the past year we've brought to market a significant number of new products—including x64, UltraSPARC IV+ and Sun Fire CoolThreads servers—and the customer response has been overwhelmingly positive."

Click here to read an interview with John Fowler about Sun's servers.

The AMD relationship has been good for both companies. The Sunnyvale, Calif., chip maker continues to gain traction in a business dominated by rival Intel, with Opteron accounting for 20.2 percent of all x86 server revenue worldwide in the second quarter, according to IDC.

In addition to the Opteron push, Sun also last fall unveiled the UltraSPARC T1 processor, a chip that offers up to eight cores and runs on a power envelope of about 70 watts. With both that chip and its adoption of Opteron, Sun has been pushing to become a leader in the growing movement for more energy-efficient data center technologies.

It also is undergoing dramatic change internally. Jonathan Schwartz has taken the reins from longtime CEO Scott McNealy and has initiated a number of programs, such as cost-cutting measures that will mean up to 5,000 job losses and the merging of its two server lines.

Overall, IDC saw unit shipments grow 8.3 percent in the second quarter, the eighth consecutive quarter of slowing growth that the firm attributed in part to the rising prominence of virtualization and multicore processing technology. Revenue grew 0.6 percent, to $12.3 billion. The driving force in the revenue growth was the volume server segment, which at 6.2 percent was the only segment to see growth. The midrange market revenue dropped 3.5 percent, and the high-end 6.9 percent.

Linux servers, which saw revenue grow 6.1 percent to $1.5 billion, represent 12 percent of all server revenue, and shipments jumped 9.7 percent. Unix revenue and shipments both declined, 1.6 and 1.8 percent, respectively. Windows server revenue increased 3.1 percent, and shipments rose 11 percent.

Sun and a California power company are offering rebates on servers. Click here to read more.

Servers running Intel's Itanium processor saw revenue increases of 36.4 percent, to more than $740 million. HP, of Palo Alto, Calif., sells more than 80 percent of all Itanium systems. Itanium servers account for 11.7 percent of all non-x86 server revenue.

Blade servers continue to be a hot commodity, with revenue growing 37.1 percent and shipments jumping 29.7 percent in the quarter.

IBM, of Armonk, N.Y., stayed atop the server market, with a 31 percent market share in revenue. HP was second, with 27.8 percent, and Dell, of Round Rock, was fourth, with 10.3 percent.

Rounding out the top five was Fujitsu, with 4.5 percent.

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