IBM Pads Server-Side Market Lead

By Clint Boulton (Send Email)
Posted Feb 28, 2005


IBM added to its lead in the server market, posting a worldwide market revenue share of 32.5 percent on the strength of its new Power5-based machines, according to Gartner results for the fourth quarter of 2004. Big Blue's 4Q04 numbers show it performing well in a server market that has improved following the economic downturn of the past few years.

In a $50 billion server market much improved from the downturn that began in 2000, Big Blue showed a total 9.3 percent growth from the year-ago period, selling a total of $16.1 billion in servers for the year.

This was good enough to extend its server lead over HP, which holds a 27.2 percent share and did $13.4 billion in sales for the year. HP did lead in total shipments for 2004, pushing 547,698 machines out the door.

At 20 percent, Dell enjoyed the most overall revenue growth in the fourth quarter, despite dropping out of the 8-way space and dipping 30 percent in the market for 4-way systems.

"They gained 20 percent for the full year because they were able to market and sell into the one to- two-way space and keep their prices stable through the year," said Gartner analyst Michael McLaughlin. The vendor posted a 9 percent share of the market on server sales of $4.8 billion.

Of the top four server vendors, Sun Microsystems lost money in its server division from the fourth quarter of 2003 to the same quarter in 2004. It lost 4 percent of its revenue market share for the quarter, dipping from 11.8 percent in the third quarter 2004 to 10.6 percent in the fourth quarter.

In specific server platforms, IBM led in Unix server revenue, growing 13.4 percent year-over-year in what analysts consider a declining market.

McLaughlin said IBM's momentum can be attributed to strong sales of its Power5-based pSeries systems, which feature virtualization features adapted from the company's mainframe systems.

Meanwhile, HP saw its Unix share dip nearly 10 percent from the previous year, which McLaughlin attributes to operational problems a few quarters ago. He said HP's strategy continues to be sound after fixing channel and sales-force issues.

"I think their transition from PA-RISC to Itanium is not as fast as they'd like it to be, but I don't see them losing a ton of customers to Sun or IBM," McLaughlin said. "Their ProLiant business definitely buoyed them."

Sun dropped 7.1 percent in Unix revenue year-over-year, though it excelled in the market for x86 systems, increasing an industry-high 360 percent.

"Sun has probably another few quarters to get their message across and show their customers they're committed to their current platform," McLaughlin said, noting that the vendor has issues with trying to bring Solaris 10 out in open source and providing a single x86 CPU through AMD.

Overall, server vendors can take heart from the sales posted in 2004. Server revenues grew a collective 7.2 percent for the year. This was higher than the 4.9 percent total increase in 2003, when the economy began to turn around.

Of course, it is also substantially better than the 8.2 percent and 13.7 percent total server revenue losses posted by the industry in 2002 and 2001, respectively.

This article was originally published on internetnews.com.

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