IDC: HP Sneaks Up on IBM in Servers

By Clint Boulton (Send Email)
Posted May 31, 2005


HP is making a comeback in server sales after a challenging 2004 campaign and a high-profile CEO change. Sales grew 5.3 percent, as Windows and Unix tie in revenue.

For the first quarter 2005, HP inched closer to IBM with worldwide server systems revenue of 27.6 percent compared to Big Blue's 28.3 percent share, according to researcher IDC.

The Palo, Alto, Calif. systems vendor, which grew server sales 8.8 percent from first-quarter 2004 to the present, also maintained its No. 1 position with 30.4 of percent server shipments worldwide.

Other research bears this out. Earlier this week, Gartner said HP blew out Big Blue's 1.1. percent revenue growth, notching 13.1 percent growth and 28.1 percent of the overall server market sales.

HP has annouced plans to move its high-end NonStop server line completely to Itanium, reaffirming its commitment to the beleaguered processor architecture.

Dell and Sun Microsystems tied for third in revenue with a 10.8 percent and 9.9 percent share, respectively. Continuing its long rise up the server charts, Dell enjoyed the largest year-to-year growth of 16.6 percent. Dell also notched No. 2 in shipments with 24.5 percent market share, a 17.4 percent expansion compared to first quarter 2004.

Overall, server sales grew 5.3 percent year-to-year to $12.1 billion, the eighth quarter in a row of revenue growth. Low-cost volume server sales grew the most, 15.6 percent, with midrange systems sales growing a modest 6.1 percent.

IDC attributed the growth to the virtualization features systems vendors are loading into their entry-level and mid-level systems. Once relegated to mainframes and other high-end machines, virtualization is wending its way into volume servers.

This is perhaps to the detriment of the high-end business servers, which dipped 13.9 percent year over year.

The numbers for the first quarter of 2005 also introduced an anomaly of sorts. For the first time in IDC's rankings, Unix server revenue and Windows server revenue were statistically tied for the quarter at $4.2 billion, showcasing increased IT spending in Windows servers.

IDC analyst Jean Bozman said Unix servers have traditionally gained more revenue from sales in the midrange enterprise and high-end enterprise server segments because they scale well.

"The equal level of spending in both segments this quarter showed that Windows servers are gaining traction in the enterprise server space with a combination of deeper investment and richer configurations," Bozman said.

Servers fitted with the open source Linux operating system continue to blossom, posting year-over-year sales growth of 35.2 percent and unit shipment growth of 31.1 percent on revenue of $1.2 billion.

Meanwhile, x86 server sales growth was strong, albeit moderated. IDC said factory revenue grew 13.2 percent to nearly $5.8 billion worldwide, while unit shipments grew 14.2 percent to nearly 1.5 million servers worldwide.

Notably, HP was able to sell enough servers based on AMD's Opteron chip to become the only top systems vendor in the 4-way x86 server space to grow revenue year-over-year.

Slimmer blade servers also performed well in the first quarter of 2005, as shipments increased 68.2 percent and factory revenue grew 106 percent to $409 million. IBM led with 39.2 percent of the market.

Gartner and IDC's estimates were similar, despite being obtained via different metrics. Earlier this week, Gartner said the overall market grew 4.1 percent to $12.3 billion worldwide compared to the first quarter of 2004.

This article was originally published on internetnews.com.

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