Server shipments sunny
According to IDC's new global server tracker, factory revenue grew at 5.5% year over year to US$11.5 billion in the third quarter of 2004, marking the sixth consecutive quarter of positive revenues especially for IBM, HP and Dell. The period also saw increased uptake of Linux, Unix and Windows besides blade server shipments.
According to IDC's Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market grew at 5.5% year over year to US$11.5 billion in the third quarter of 2004, marking the sixth consecutive quarter of positive overall revenue growth.
Volume server revenue grew 18.2% year over year and continues to represent the primary growth engine for the server market overall. Revenue for midrange enterprise servers declined 10.2% year over year marking the third consecutive quarterly decline as traditional midrange workloads continue to migrate to volume systems.
Buoyed by renewed enterprise spending, the high-end enterprise server market grew 1.9% year over year, its forth consecutive quarter of positive revenue growth.
"IT spending remained strong overall in the third quarter as customers continued to refresh and expand their IT infrastructures,” says Matt Eastwood, programme director of Global Enterprise Server Solutions at IDC. “Although customers continue to target data center simplification initiatives, investment in strategic IT initiatives – including new workloads – are also growing significantly once again.”
Under the research firm's taxonomy, the global server market is mapped on eleven price bands and three price ranges: volume servers (servers priced less than US$25,000), midrange enterprise servers (US$25,000 to US$499,999), and high-end enterprise servers (US$500,000 or more).
Strong year-over-year unit shipment growth of 18.7%, reflecting strong unit growth in the volume server segment.
Linux servers posted their ninth consecutive quarter of double-digit growth with year-over-year revenue growth of 42.6% and unit shipments up 31.7%. This was slightly slower than the 1Q04 revenue growth rate of 48.1% and 1Q04 unit growth of 38.0%.
Microsoft Windows Server 2003 shipments, based on x86 server hardware, showed strong growth, as revenues grew 13.3% and unit shipments grew 19.1% year over year. Quarterly revenue of US$3.9 billion for Windows servers represented 33.9% of overall quarterly factory revenue, essentially equal in size to the Unix market.
Unix servers, which primarily includes IBM-AIX, Sun Solaris and HP-UX experienced 8.3% unit growth year over year and a 2.3% revenue decline over 3Q03 with total Unix revenues of US$4 billion for the quarter.
On the vendor front, IBM held on to its number one spot in the worldwide server systems market with 31.7% market share in factory revenue while growing factory revenue by 6.3% compared to 3Q03.
In terms of unit shipments, HP was the number one vendor worldwide. HP maintained the number two spot in terms of factory revenue with 26.8% share, growing revenue 2.9% compared to 3Q03.
Sun and Dell tied for third place in factory revenue with 10.2% and 10.1% share respectively. Dell experienced strong 14.1% year-over-year revenue growth while Sun’s revenues were flat, growing 0.1% when compared to 3Q03.
The x86 server market dynamics continued to be strong. Factory revenue grew 14.2% to more than US$5.4 billion worldwide – exceeding the revenue generated by RISC-based servers worldwide for the third consecutive quarter. Unit shipments grew 18.3% to more than 1.4 million servers worldwide.
IBM and Dell both outpaced the category's growth rate, posting year-over-year unit shipment growth of 26.0% and 25.5%, respectively.
The third quarter was marked by an acceleration in the x86-64 servers ramp in volume. "The introduction and the beginning of a transition to systems based on Xeon EM64T helped drive EM64T based processors into nearly 60,000 units worldwide," says John Humphreys, research manager of IDC's Global Enterprise Server Solutions. "At the same time, Opteron grew volumes greater than 400% year over year."
"It is interesting to note the different markets these products are serving," Humphreys adds. Opteron is largely selling into corporate, government and industrial market segments with a need for high performance systems – hence over 60% of AMD's volumes are tied to Linux server deployments.
Conversely, EM64T is shipping overwhelmingly with Windows and is being deployed largely in existing 32-bit environments.”
Linux server revenues surpassed US$1 billion in quarterly factory revenue for the first time in 3Q04. Linux server revenues showed 42.6% growth, while unit shipments grew 31.7%, reaching 9.2% of overall quarterly server revenue.
Worldwide investment in Linux servers for both technical and commercial workloads remains strong as the platform continues to expand its presence in data centers around the world. HP maintained its number one spot in the Linux server market, with 26.9% market share in terms of revenue, while IBM was second with 20.5%. Dell maintained the third spot with 17.4% of Linux server spending.
The server blade market showed continued growth in the quarter, with shipments increasing by 44.0% year over year and factory revenue gaining 22.5% sequentially. Overall, bladed servers accounted for US$287 million in the third quarter, representing 2.5% of quarterly server market revenue.
IBM maintained the number one spot in the server blade market, with 44.2% market share "End user spending for blade servers in the third quarter exceeded our expectations as we saw a shift in mix away from single-processor blades to dual- and quad-processor blade systems. Richer user configurations also contributed to the continued growth in this segment of the market," says Jessica Yang, research analyst of IDC's Global Enterprise Server Solutions.
"As more small and medium-sized businesses begin to adopt blades and with Dell re-entering the market, blade servers are on pace to surpass a billion dollars in revenue worldwide in 2004."