Fourth Quarter Server Sales Reveal Shift

By Clint Boulton (Send Email)
Posted Feb 22, 2006


Increasing sales of low-cost servers was likely the culprit for the first quarterly decline in revenue since the first quarter of 2003, according to new IDC research. According to IDC, server volume went up at the expense of server revenue, while Windows server sales trumped that of Unix servers, which saw a decline.

Server market sales for the fourth quarter were $14.5 billion, though 2005 was a fine year for server sales in general.

IDC said worldwide server revenue grew 4.4 percent to $51.3 billion for 2005, with unit shipments growing 11.6 percent to 7 million.

Volume systems, smaller machines that IDC classifies as costing roughly $25,000, continued to carry the market, growing 7.3 percent from the year-ago period.

Sales for midrange enterprise servers, costing $25,000 to $499,000, plummeted 11.5 percent year over year; the high-end enterprise server market, $499,000 and up, dipped 1.7 percent.

IDC said these machines will continue to spur market growth as demand for larger, more expensive midrange and high-end systems, fades.

Servers based on Windows, a popular operating system for volume machines, accounted for a third of server market revenue at $4.9 billion for the quarter.

Windows machines also notched something of a milestone.

For the first time, the Windows server market beat the Unix market in terms of dollars spent over the course of a full year. The research firm said customers used Windows servers for enterprise workloads and server virtualization projects.

Windows server revenues totaled $17.7 billion for 2005, besting the $17.5 billion in Unix server sales for the year. Moreover, Unix server revenues fell 5.9 percent for the quarter, to $5 billion.

Linux servers, which industry watchers use to measure the barometer of success for open source software, are still far behind Windows and Unix in shipments and sales.

Linux server sales were $1.6 billion for the quarter and $5.7 billion for the year.

However, Linux server sales boasted year-over-year revenue growth of 20.8 percent. IDC said more customers are using Linux servers in a "wider array of commercial and technical workloads."

Machines based on Intel's x86 architecture continued their strong growth. Revenues of these servers topped $6.8 billion for Q4, thanks to the rising popularity of dual-core machines from Intel and AMD.

To that end, the blade server market, thin servers that cut the clutter of traditional server cables, grew 49.3 percent year over year. Blade sales rose 56.9 percent from 2004 to 2005.

In terms of leading server vendors, there were no major changes for the year.

IBM again led the market, with 38.4 percent of server sales. HP nabbed No. 2, with 26.8 percent share and gained 1 point of market share overall. HP again shipped the most machines, at 30.2 percent.

Dell kept its hold on third place with 9.6 percent factory revenue market share for Q4 and retained the No. 2 spot in terms of server shipments, at 23.3 percent.

Still in fourth place but fading, Sun posted a sales decline of 10.9 percent in the quarter to 8.2 percent.

This article was originally published on internetnews.com.

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