Strong server sales point to building IT recovery

27 November 2003 Burgeoning demand for low-end systems and Linux-based machines helped drive a second consecutive quarter of sales growth in the global server market.

The figures for the third quarter of 2003, compiled by IT market researcher IDC, represent a fresh sign of a building IT market recovery after more than two years of declining server sales.


There were two notable exceptions to the stream of good news, however: sales of high-end servers fell 14%, while once high-flying systems vendor Sun Microsystems endured yet another disappointing quarter, its server revenue slipping back 9% compared to the same period last year. Analysts said the two were linked.

Elsewhere, there was cause for optimism. Overall, server shipments grew 19% and revenue rose 2%. “That tells us that people are starting to spend again. The fact that you have revenue growth at all is a good sign,” said Vernon Turner, an IDC vice president.

The strongest sales growth came from the market for servers costing less than $25,000 – known as ‘volume servers’ – with revenue growing 10%.

“Volume servers are generating most of the positive momentum in the worldwide server market,” said Turner. “This shows that the IT community has embraced volume server deployments as a mainstream technology to meet a wide range of data-processing requirements and to support a wide variety of computing workloads.”

In the market for x86-based servers – machines powered by Intel and AMD processors – revenue grew 8% and shipments jumped by 21%. The blade server market also expanded, with 50,000 systems shipped in the quarter and more than 120,000 for the year so far. And the market for mid-range servers – systems costing between $25,001 and $499,999 – grew 7% by revenue.

IDC also reported fresh evidence of the growing momentum behind Linux, the open source operating system. Revenue from Linux systems grew 50% to $743 million, while shipments jumped by 51%. Windows-based systems also enjoyed a strong quarter, with revenue up 10% to $3.4 billion and shipments increasing by 21%.

The decline in the market for Unix-based system also slowed. Revenue dropped 4% to $4.1 billion, but shipments actually grew by 4%.

Of the vendors, IBM maintained its overall lead based on revenue with a 31% market share, ahead of Hewlett-Packard (28%), Sun (11%), Dell (10%) and Fujitsu/Fujitsu Siemens (6%).

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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