News

IDC: Server Shipments Strong but Unix Declines

• By Stuart J. Johnston
• November 29, 2005

Sales of servers continued at top acceleration in the third quarter, partly driven by customers' increasing deployments of virtualization technologies, while Linux and Windows servers further eroded Unix's high-end turf, according to IDC's Worldwide Quarterly Server Tracker.

Factory revenues grew at 8.1 percent year-over-year to $12.5 billion, making it the tenth consecutive quarter of revenue growth. Volume server revenue growth of 14.8 percent year-over-year continues to drive the market, IDC said, demonstrating continued end-user investment in a robust server infrastructure.

Midrange enterprise servers grew as well, though only by 3.8 percent, the fourth consecutive quarterly increase for that segment, while high-end enterprise servers shrank by a moribund 1.2 percent year-over-year. In fact, it was the fourth consecutive quarter of declining revenue for high-end enterprise servers, according to IDC's report.

The overall outlook showed steady growth, however. Year-over-year unit shipments advanced 11.3 percent -- two-thirds the growth rate in the year ago quarter. The firm's analysts said this "reflects a transition in the volume-server market segment as a growing number of users implement virtual servers requiring increasingly robust server resources, which effectively drives higher average selling values and lower unit growth."

Windows servers revenue grew 17.7 percent and units shipped expanded by 15.3 percent. That made Windows factory revenue the largest segment of the server market for the first time, IDC said.

Meanwhile, Linux servers also surged ahead, showing their thirteenth consecutive quarter of double-digit growth. Year-over-year revenue for the Linux segment hit 34 percent, while shipments were up 20.5 percent.

"Although both factory revenue growth and unit growth have cooled from 2Q05 levels, it is clear that customers continue to expand the role of Linux servers into a broader range of workloads in both the commercial and technical segments of the market," the report stated.

The growth in less expensive solutions has also cut into the market for Unix servers, where unit shipments declined 13.7 percent compared to the year-ago quarter. However, sales are holding the line overall: Worldwide Unix revenues of more than $3.9 billion for the quarter represented 31.7 percent of overall quarterly factory revenue.

No surprise, IBM continues to hold the top place with 32.3 percent market share in factory revenue, up by 10.3 percent over last year. HP retained second place with factory revenue of 27.8 percent. However, HP was the leader in overall unit shipments with 28.8 percent, a growth rate of 6.4 percent over last year.

Dell came in third, with 10.5 percent overall share of factory revenue. However, it placed second in terms of unit shipments, with 23.9 percent share. Dell experienced 11.8 percent revenue growth compared with last year, while Sun declined 7.6 percent in the quarter to hold an 8.7 percent market share.

One significant trend stands out: increasing demand for x86-based servers, particularly ones that support 64-bit memory extensions. The x86 marketplace demonstrated a 16 percent year-over-year revenue bump that approached $6.3 billion in factory revenues globally.

Growth for the x86 64-bit market segment exploded by more than sevenfold, however, IDC said. Indeed, while x86 32-bit server revenue declined by 60.7 percent, x86 64-bit sales burgeoned.   "In fact, x86-64 servers represented 69 percent of all x86 server spending and now comprise the single largest segment of the server market by CPU type for the first time as this rapid transformation of the x86 marketplace into a segment that is 64-bit enabled continues."

Additionally, make way for multi-core processors to impact the market in coming quarters.

"The throughput of x86 servers continues to increase as the transition to 64-bit capability accelerates , and these capabilities will only increase further with a wholesale move toward dual-core processors in the x86 server market over the next few quarters," said John Humphreys, IDC research manager, enterprise servers, in IDC's prepared statement. "Dual-core servers represent nearly 25 percent of all server spending today, and in the x86 market, blade form factors are leading the move to dual core."

Not surprisingly, blade servers are graining ground as well. Server blade shipments grew by 72.1 percent year-over year, with factory revenue jumping a whopping 96.8 percent. Overall, bladed servers, including both x86, EPIC and RISC blades, accounted for $569 million in the third quarter, representing 4.6 percent of quarterly server market revenue.