Guides Bottom Line: Server Market is Shrinking, Says Dataquest

Bottom Line: Server Market is Shrinking, Says Dataquest

It is now officially a ritual: the quarterly release of the Gartner Dataquest
research regarding server shipments and market share, followed by the vendor”s
press releases spinning the research into positives.

Take, for example, the press release issued by Sun Microsystems yesterday
regarding the research:

It is now officially a ritual: the quarterly release of the Gartner Dataquest
research regarding server shipments and market share, followed by the vendor’s
press releases spinning the research into positives.

“Sun Microsystems, Inc. today announced that it once again holds the
number one position in the RISC/UNIX server market worldwide. According to 3Q01
Dataquest numbers, Sun”s 55 percent marketshare in shipments is more than that
of its nearest three competitors combined. Furthermore, with nearly $1.5 billion
in revenue, Sun has significantly outpaced its competitors in marketshare
revenue gain.”

All of that is true. This relatively sunny view of the research is shared by
Compaq in its own press release:

“Compaq Computer Corp. today
announced it has regained the #1 market share position for industry-standard
(Intel architecture) servers in both the U.S. and North America for Q3 2001.
According to statistics released by industry research firm Dataquest, Compaq
ProLiant servers gained two percentage points of market share in the U.S.
sequentially, and more than two points in North America. Dataquest figures also
indicate that Compaq has grown faster
than any other major competitor for the past two quarters in this segment.”

Now, leaving aside the issue of whether Intel-based servers are the industry
standard (Sun, IBM, and Hewlett-Packard may disagree), Compaq”s press release is
basically true as well.

A more analytical view of the data yields a different story, however: worldwide
server sales slowed down in the third quarter, mirroring a general slowdown in
the worldwide economy.

Gartner Dataquest estimates that worldwide server revenue dropped 23.4
percent in the third quarter when compared to the third quarter of 2000: $10.8
billion in 2001, as opposed to $14.1 billion in 2000. Sales in the United States
plummeted even further: 29.4 percent when compared to the third quarter of 2000.

Almost every major vendor took their hits both in terms of market share and
revenues, according to Dataquest. While Sun does have a major share of the RISC
server space, its share of the total server market shrunk from 17.3 percent in
2000 to 13.7 percent in 2001, and its server revenue went from
$2.4 billion to $1.5 billion. Why the drop? Corporate purchases are down, dot-coms
aren”t buying servers, and Intel-based servers running
Windows and Linux are biting off the low end of the server spectrum, as
corporations are replacing UNIX-based servers with Windows/Linux servers.

In fact, the Intel server market is now almost as large as the UNIX/RISC
server market, says Dataquest: The UNIX/RISC market generated $4.6 billion in
revenues, compared to $4 billion in sales for Intel servers. While both markets
shrank in the third quarter, the Intel market shrunk modestly (down only 3.1
percent), while the UNIX/RISC market shrunk 15.5 percent.

That”s why it”s no surprise that the vendor with a major presence in both the
UNIX/RISC and Intel markets is the vendor who came out smelling like roses in
Dataquest”s research: IBM. In fact, IBM gobbled up 30.3 percent of all server
revenue in the third quarter of 2001: $3.3 billion. This was an increase of 7
percent in terms of market share over 3Q2000. Strong sales across the board
accounted for the increase.

Still, not all was rosy on the Intel side. Compaq is the number-one seller of
Intel-based servers, but it gathered only 13.8 percent of server revenues, down
from 15.7 percent a year ago. And while Dataquest measures past performance, it
makes no estimates on future performance, so we”ll need to stay tuned to see if
the economy rebounds to the point where the server market rebounds as well.

Related Story:
Reports Continued Growth in Worldwide Server Market

Latest Posts

Proxmox vs VMware Comparison

Proxmox virtual machines (VM) are highly popular with home server aficionados, whereas VMware sits squarely at the front of the enterprise VM market. Both...

What is Load Balancing?

Load balancing is a technique that ensures an organization's server does not get overloaded with traffic. With load balancing measures in place, workloads and...

Installing and Activating Hyper-V Linux Integration Services

Editor's Note: Updated to reflect changes with the Hyper-V Linux Integration Services 4.3 release. Microsoft developers have designed components that help in improving the performance of...

What is a Hypervisor Server?

At its most basic, a hypervisor is the “manager” of a software-hardware stack. The term “hypervisor” derives from the word “supervisor.” What is a Hypervisor? When...

HPE SimpliVity 380 Server Review

The HPE SimpliVity 380 Server was designed to deliver the high performance required by enterprise data centers in a simplified package. One of the...

Related Stories