HP Elbows Past IBM in Servers

By Andy Patrizio (Send Email)
Posted May 25, 2007

IT research firms Gartner and IDC both released their first-quarter 2007 server sales figures this week. Both reveal HP is flattening the competition, while IBM is proving there's life left in its venerable mainframe.

The latest server stats from IDC and Gartner are more alike than different. Once again, HP and IBM took the lead, and sales volume remained down while revenue went up.

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As usual, the two research firms were close in their estimates. Gartner reported worldwide server shipments rose 6 percent compared to the same quarter last year, reaching 2.1 million units, while revenue for the same period climbed 4.5 percent, to $12.9 billion for the quarter.

IDC projects the market grew 4.9 percent year-over-year to $12.4 billion in the first quarter of 2007, with unit shipments up 4.6 percent. It did not give a unit sales figure.

Where the firms differ is in who they name as market leader. IDC puts HP in the lead for first-quarter 2007, with $3.615 billion in sales and 29.2 percent market share. IBM is in second place with $3.579 billion in revenue and 28.9 percent market share.

Gartner reverses the positions, with IBM in the lead with $3.832 billion in revenue and 29.8 percent market share, and HP is in second place with $3.635 billion and 28.2 percent.

This difference can be chalked up to methodologies for determining sales.

What's not in doubt is HP's execution. That, said Jed Scaramella, research analyst in IDC's enterprise computing group, is excellent. "HP has said they are now focused on not selling technology for technology's sake. They talk about how every piece of technology relates back to the business case for the customer," he told internetnews.com.

HP's sales strategy is to get away from emphasizing "speeds and feeds," as Scaramella put it, and adopt "consultative selling" to its sales methodology. Every piece of equipment pitched to a customer is presented on the premise of how it will improve the business, lower costs and improve productivity.

IBM did well, particularly with its System z mainframe line. Sun is also doing well, growing slightly if not quickly.

The two research firms differed a bit on where Dell and Sun fit into the mix. IDC has Sun in third place, with $1.356 billion in revenue and 10.9 percent of the overall sales, and Dell in fourth place with $1.346 billion and 10.9 percent of sales.

Gartner recorded a wider gap, placing Dell in third with $1.441 billion in sales, for 11.2 percent, and Sun in fourth with $1.327 billion in revenue. Either way, Dell's numbers were up, a good sign for the troubled company.

Although Sun did exhibit something of a rebound, with sales up 6 percent over the same quarter in 2006, Scaramella said questions remain about Sun. "I think what we still want to see is if they moving beyond their installed base," he said. "If they're going to grow they need to sell beyond their [current] customers."

Sales overall this quarter reflected the trend from fourth quarter 2006 — fewer physical units, but more powerful, decked-out systems, a trend that shows no signs of abating.

This article was originally published on internetnews.com.

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