IDC: Server market hits $11.5 billion

Fuelled by strong sales of Windows and Linux systems, the worldwide server market grew to US$11.5 billion during the second quarter of 2004, according to numbers released Friday by industry research company IDC.

Server shipment revenue was up 6.9 percent from last year's second quarter, and the total number of servers shipped jumped 21 percent during that same period, IDC said.

IBM retained is position as the top server vendor, when measured by revenue, with total sales increasing 11.7 percent, year over year, to $3.7 billion. Strong sales in IBM's mainframe product line, which saw revenue grow 40.6 percent to $1.5 billion during the same period, contributed to Big Blue's strong showing, IDC said.

Hewlett Packard (HP) was in the No. 2 position, with sales of $3.1 billion during the quarter -- a year-over-year increase of 4.6 percent.

When measured by units shipped, however, HP led the market during the quarter. The computer maker shipped 465,000 servers during the period, an increase of 22 percent from the 378,000 units it shipped during the same quarter in 2003.

A highly publicized slowdown in server sales caused by glitches in HP's new ordering processing and supply chain system was not reflected in IDC's numbers, because HP's problems began after the second-quarter period, said IDC research vice president Jean Bozman. IDC's numbers cover the three months ending June 30, she said.

The order processing problems, which were blamed for an estimated loss of $400 million of potential revenue, began over the July 4 weekend, according to HP. Those problems were reflected in results for HP's fiscal third quarter ended July 31.

Linux continued to be the fastest-growing server platform, with revenue growth of 48.9 percent and unit shipment growth of 38.2 percent, IDC reported. The open source operating system's growth rate slowed somewhat from the first quarter of 2004, when revenue grew by 57 percent and unit shipments were up 46.6 percent year over year.

Windows systems revenue grew by 13.2 percent from second-quarter 2003 numbers and totaled $3.6 billion, IDC said.

Though Unix system shipments grew by a respectable 20.2 percent year over year, revenue from Unix systems was actually down by 3 percent during the period.

Sun Microsystems, the Unix market leader, with 33.6 percent of this $4.2 billion market, continued its trend of posting strong unit shipment growth but weak revenue growth. Though shipments of the company's servers grew at 33.8 percent -- the fastest rate of the major vendors -- Sun's revenue was up only 0.2 percent from the previous year, totalling $1.44 billion for the quarter.

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