IDC Sees Server Business Helped by Intel, AMD
Market research firm IDC has released its own quarterly server figures, and came to roughly the same conclusion as its counterpart Gartner did last week: The server market is still down but stabilizing, and the worst appears to be over. New chips from the two competitors have given customers a reason to start buying again.
Unlike Gartner, however, IDC gives a specific reason for the turnaround: It believes powerful new processors from Intel (NASDAQ: INTC) and AMD (NYSE: AMD) are the reason for the improved buying outlook.
"Improved" is still a relative term, however. While IDC's Worldwide Quarterly Server Tracker noted that worldwide server revenue declined 17.3 percent year-over-year to $10.4 billion in the third quarter of 2009, while unit sales fell 17.9 percent, unit sales grew a healthy 12.4 percent from Q2 of this year -- the largest sequential unit growth since 2005.
All three server segments -- low-end/volume, midrange enterprise, and high-end enterprise -- experienced year-over-year revenue decline in the third quarter, but volume servers -- x86 servers under $25,000 -- bounced back nicely in Q3 when compared to Q2.
"The x86 marketplace began showing expected signs of recovery in the third quarter of 2009. Customers found a convincing value proposition to refresh their systems due to strong product releases from vendors powered by the latest Intel and AMD processors," IDC research analyst Daniel Harrington said in a statement.
"With many of the latest x86 offerings promising a return on investment of less than a year, IT managers were able to free up budget to invest in much needed replacement of their aging infrastructure," he added. "Because of constrained budgets, customers also got smarter and began investing in more fully configured systems to support their virtualized environments. As the market continues a volume-based rebound, the x86 market will continue to develop and should expect to return to positive growth shortly."
According to IDC's figures, IBM (NYSE: IBM) and HP (NYSE: HPQ) ended the third quarter nearly tied, with 31.8 percent and 30.9 percent of overall factory revenue market share, respectively. IBM's overall factory revenues declined 12.9 percent while HP's factory revenues dropped 16.8 percent year-over-year.
The comparative strength in x86 proved to be a boon for Dell, which is x86-only. It experienced only a 6.8 percent revenue decline to remain in third place, with 13.5 percent of overall market share.
For Sun Microsystems (NASDAQ: JAVA), the hurt continued during the quarter. The company saw the greatest revenue decline, with year-over-year factory revenues off 35.0 percent and its market share down to just 7.5 percent. In large part, Sun continues to falter due to delays in its proposed acquisition by Oracle (NASDAQ: ORCL).
Fujitsu, which sells servers with Sun's UltraSparc processor, remained in fifth place with 5.7 percent of the market.
Servers running Microsoft Windows Server, which accounts for 43 percent of server sales, fell 12.8 percent year-over-year. Linux just beat out Windows, dropping 12.6 percent from a year earlier and accounting now for 14.8 percent of server revenue.
Unix-based servers took a much harder hit, down 23.4 percent. IBM rules that market, with 39.5 percent share, followed by HP with 29.2 percent and Sun with 23.4 percent share.
The strongest market, and the only one in positive territory, was blade servers. IDC found blade servers grew a modest 1.2 percent year-over-year in factory revenue, although unit shipments were down 14.0 percent. This is because customers bought fewer but more decked-out systems, with more memory and storage, IDC said.