Server Sales Grow in 2007

By Andy Patrizio (Send Email)
Posted Feb 26, 2008


Worldwide server shipments in the fourth quarter of 2007 grew 3.8 percent over the same quarter in 2006, while server shipments for the year were up 7.4 percent compared to the previous year, according to a report from Gartner.

From quarter-over-quarter to year-over-year, server shipments and revenue grew in 2007. Zoom in closer and a more ragged landscape appears: While more x86 boxes shipped, fewer RISC systems left the factory. Economic uncertainty and the full impact of virtualization have also not yet entered the picture.

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The x86 market continued to grow in units sold, while the RISC market fell in terms of units. It still grew in dollars, however, due to increasingly decked out systems.

"What we're seeing I believe is a rapid and strong growth in server virtualization, but we're still seeing shipment and revenue growth," Jeffrey Hewitt, research vice president at Gartner told InternetNews.com.

"That's because budgets may be increased into server numbers where they didn't want to consolidate on virtualization," he said. According to Hewitt, a company may virtualize in some areas and put that savings into more servers in other segments, like databases.

For the quarter, the x86 market grew a healthy 12.2 percent by unit shipments and 10.1 percent by revenue. The RISC market shrank 14.2 percent by units sold in the quarter, but revenue grew 3.8 percent.

For the year, x86 was up 8.7 percent for units and 9.6 percent in dollars, while RISC shrank 13.8 percent and revenue inched up 1.7 percent.

HP was the overall leader for the year in units (2.6 million), market share (29.8 percent) and annual growth (16.6 percent). The biggest growth in 2007 came from Dell, which is in the midst of a turnaround following Michael Dell's return as CEO.

Dell's worldwide revenue was $6.26 billion, up 13.2 percent for the year for third place behind IBM and HP.

"You certainly have to give HP nods on execution," Hewitt said. "They've enabled partners on a global basis, and they are doing well across the globe."

He added, "They are really focused, with x86 doing best for them."

IBM was the worldwide leader in server revenue with $17 billion for the year, but it trails behind HP and Dell in terms of units shipped. Gartner said System x sales were up 10.2 percent, and System p was up 9.1 percent. The growth, however, was nearly canceled out by a 9.6 percent drop in System z and System i sales.

Blade servers continue to be the hot commodity, with revenue up 44.5 percent over 2006 and a unit shipment increase of 19.9 percent. HP was the 2007 leader with 41.7 percent shipment share, followed by IBM with 30.9 percent of shipment share.

While Sun is seeing its RISC market shrink — 15.2 percent in 2007 and 10.4 percent in Q4 — its x86 profile is rising fast. It saw the best growth in 2007 among x86 vendors, with revenue shipments up 23.9 percent.

It only recently entered the x86 market, first with AMD Opteron processors and then with Xeons late last year, so its revenues did not make the top five list.

"They've got to get on track and show some strong execution in x86 to offset the decline in RISC," Hewitt said.

Gartner is projecting a slight increase in server sales and revenue in 2008, but the exact figure remains unclear due to the economic outlook. Hewitt said servers are not a good leading indicator because server budgeting is usually done a quarter or two in advance, so any impact of a financial downturn won't show up for at least one or two quarters.

This article was originally published on InternetNews.com.

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