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IDC: Windows Server Sales Booming, Linux Growing Faster

• By Scott Bekker
• December 03, 2003

The Windows-based and Linux-based servers are riding an overall trend in server purchases toward higher volume, lower cost sales. The same trend sees No. 4 Dell climbing in the vendor rankings to within striking distance of No. 3 Sun Microsystems.

Meanwhile, the Q3 2003 results are the second consecutive quarter of growth in the overall server market after nine consecutive quarters of declines. Worldwide server systems revenues were up 2 percent to $10.8 billion, according to IDC's report last week. "Two quarters of positive growth do not necessarily mean that a long-lasting economic rebound is in place," Vernon Turner, an IDC analyst, said in a statement.

Server systems shipping with Windows saw factory revenues increase by 10.3 percent over the year-ago quarter to $3.4 billion and unit shipments rise by 21.4 percent. IDC attributes the revenue growth to upgrades from Windows NT to Windows 2000 or Windows Server 2003 and larger average sales prices as more customers buy servers running Windows on four or more processors.

While Windows growth was strong, servers shipping with Linux soared with 49.8 percent growth in factory revenues to $743 million and 51.4 percent growth in unit shipments. Linux factory revenues are starting to add up to real money in the server market. (IDC defines factory revenues as everything that ships with a new server from operating system to memory to processors to cables to disks).

Even as the Linux share of the pie increases, its rate of growth continues to increase, which suggests Linux is gaining strength rather than comfortably humming along. In the second quarter, for example, the year-over-year increases reported by IDC for Linux were 42 percent for unit shipments and 40 percent for revenues. "Linux servers have demonstrated six consecutive quarters of year-on-year revenue growth, proving that they are not a flash-in-the-pan technology and that they are meeting real-world computing requirements in HPC and commercial deployments," IDC analyst Jean Bozman said in a statement.

On the Unix side, the segment is still seeing declining revenues compared to the year-ago quarter, but the rate of decline is getting better. While the second quarter saw a 5.7 percent year-over-year drop, the third quarter saw a 3.8 percent year-over-year drop. In absolute dollar terms, Unix is the largest single segment at $4.1 billion for the quarter. Unix server unit shipments actually inched up 4.3 percent.

The blade-server segment continued to see strong growth in the quarter, according to IDC, with 50,000 unit shipments for a year-to-date total of 120,000 units.

By vendor, IBM held the lead with $3.37 billion in revenues for 31 percent of the market. HP was next with nearly $3 billion in revenues for 28 percent share. Sun was third at $1.17 billion and almost 11 percent share. Dell is closing fast on Sun with just over $1 billion in revenues and 9.5 percent share. Dell's revenue growth for the quarter was 11.6 percent. Sun's revenue fell 9.3 percent compared to the year-ago period.