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IDC: Volume Servers Shaking Up Server Market

Volume servers, the industry-standard servers powered by Intel and to a lesser extent AMD processors and generally running Windows or Linux, are having a profound impact on the worldwide server marketplace, according to IDC analysts who just published their estimates for server shipments in 2003.

While the assertion has a "no kidding" quality to it, and IDC analysts themselves have predicted and tracked the impact for some time, those same analysts believe they are now documenting that impact across all sectors of the server market.

"Volume server capabilities are driving into several tiers of the computing infrastructure," Vernon Turner, group vice president of IDC's worldwide server group, said in a statement. "It shows that high-end server technology has cascaded to this market, and that infrastructure is being augmented by industry standards and IT is reaping the benefits."

IDC contends that even the high-end enterprise server market, which IDC defines as servers costing $500,000 or more, is growing with an infusion of industry standard systems. Several vendors offer Itanium-based servers in that market, including HP, Unisys and NEC.

Meanwhile, vanilla x86 servers continue to surge, with factory revenues growing at 15 percent to $5.5 billion and unit shipments at 23 percent to nearly 1.4 million servers in the fourth quarter of 2003. For a bit of perspective on how many units 1.4 million servers in a quarter represents, IDC estimates that worldwide for all of 2003, 5.3 million units of all kinds of servers shipped.

Mark Melenovsky, IDC's program director for its server research group, said the x86 segment is growing in importance and evolving, as evidenced by Intel's 64-bit extensions for Xeon and AMD's traction with Opteron. "IDC expects 2004 to be a tipping point for enterprise x86-architecture server adoption," Melenovsky said in a statement.

The Windows server market grew in the fourth quarter of 2003 with factory revenues increasing 16.1 percent to $3.9 billion or 31.7 percent of quarterly server market revenue. Unit shipments gained 23.3 percent for the quarter.

Linux grew far more dramatically, as usual. Linux servers generated $960 million in the fourth quarter, 63.1 percent better than the same quarter for 2002. Linux server shipments shot up by 52.5 percent for the quarter.

Worldwide, across all types of servers, the fourth quarter saw 11.4 percent growth to $13.7 billion for the third straight quarter of year-over-year growth. Unit shipments were up by 22 percent compared against the same quarter in 2002. For the entire year, worldwide server revenues were up 3.2 percent to $45.7 billion. IBM led the market with 31.6 percent share and HP was second with 27.3 percent share, according to IDC.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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