IBM loses server market share to rivals HP, Dell, Sun

HP, Dell and Sun made significant gains in the worldwide server market at IBM's expense in the third quarter, Gartner said in a report issued this week.

Despite losing market share due to an 8.1% drop in revenue and 3.9% drop in shipments, IBM issued a press release claiming success, noting that it still holds a slim lead in market share revenue.

The popularity of server virtualization hasn't significantly affected overall server sales. Worldwide, shipments grew 8.7% over the previous year's third quarter, with 2.2 million units delivered, for revenue growth of 2.6%. The server market started growing in the second quarter this year after three years of stagnant sales, a previous report by IDC said.

"Underlying market dynamics such as growth from emerging markets, coupled with an ongoing demand for increased capacity, are stronger than any inhibitors such as server virtualization," Gartner analyst Errol Rasit said.

HP made the biggest gains, delivering 649,958 server shipments, 20% more than the previous year's third quarter. HP was already making the most shipments but solidified its lead over second-place Dell and third-place IBM.

IBM earned more server revenue than any of its rivals, despite making 319,674 third-quarter shipments, fewer than half the number delivered by HP.

HP did narrow IBM's lead in revenue market share, growing revenue 13.9% to US$3.7 million. IBM revenue dropped 8.1% to US$4 million, for a slim lead over HP -- 30.1% to 28.1% - in revenue market share.

Dell and Sun posted double-digit revenue increases but are still a distant third and fourth place in market share, according to Gartner's statistics.

The 8.7% increase in worldwide server shipments was driven partly by growth in the x86 and blade server markets, both led by HP, which shipped 91% more blade servers than the previous year's third quarter.

IBM was able to increase revenue for System p and System x, but lost revenue for its System z mainframes and System i midrange servers.The company nonetheless touted the popularity of its System z mainframe, saying it led the market in revenue for servers priced at US$250,000 or more.

"We believe IBM's eight consecutive years of leadership in the worldwide server market is a testament to our commitment to technology innovation for our clients," Bill Zeitler, senior vice president and group executive for IBM Systems & Technology Group, said.

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