News

IDC: Server Market Ends Nine-Quarter Skid

• By Scott Bekker
• September 03, 2003

Windows server sales boomed, Linux sales grew even more quickly, and the Unix bleeding slowed.

"Although it's too soon to declare a rebound in the server market, it looks like new IT buying patterns are overtaking old ones," Jean Bozman, research vice president at IDC, said in a statement.

Overall, the market in Q2 2003 added up to $10.6 billion in revenues on 1.2 million unit shipments. The revenues were just 0.2 percent higher than the year-ago quarter, while the unit shipments were 17.5 percent higher, illustrating the sharp drop in worldwide server prices. IBM holds the lead for general server factory revenues with $3.2 billion or 30.4 percent market share.

Windows servers, which account for the largest segment by unit shipments worldwide, saw unit shipments increase by 21.7 percent, according to IDC. By factory revenue, a measure that includes everything that ships with a new server from operating system to memory to processors to cables to disks, Windows servers grew 11.5 percent to hit $3.1 billion for the quarter. By vendors, HP led the Windows-based server segment by factory revenues.

The Windows-based server gains slightly outpaced overall gains for x86 servers, which include systems built with Intel or AMD processors. That larger segment grew by 21 percent in unit shipments and 9 percent by factory revenue. IDC analysts attribute the general momentum of x86 systems to the growth of small and medium business worldwide, demand in departmental and workgroup environments in enterprises and the slow and steady replacement of servers that were purchased during the 1999-2000 server sales boom.

Growing much faster than that general x86 market was the segment of servers shipping with Linux. They increased unit shipments by 42 percent and revenues by 40 percent, faster than any other server market segment. Overall revenues for Linux-based servers added up to $650 million. HP also led sales in the Linux segment.

While Unix continued losing ground in the quarter, the Unix-based market segment still accounts for the largest slice of server factory revenues at $4.3 billion. The figure represents a 5.7 percent decline from the year-ago quarter, but that drop is an improvement from the 12.7 percent revenue decline IDC reported for the year-over-year comparison for the first quarter.

The Unix segment remains highly consolidated, with the top three vendors controlling nearly 90 percent of the market. Sun Microsystems leads with 33 percent market share, HP is second with 31.4 percent share and IBM is third with 24.6 percent share.