Gartner: IBM, HP lead server market thanks to x86 sales

IBM beat HP for first quarter server revenue, according to a Gartner report

IBM edged out Hewlett-Packard in first-quarter server revenue, as both companies relied on a rebound in sales of x86-based computers, according to a market report released Tuesday.

X86 server sales had been sluggish in the fourth quarter as buyers used efficient virtualization technology and slowed their buying cycles to wait for the arrival of quad-core processors, according to the report from Gartner. That trend ended in the first three months of 2007, as global server revenue rose 4.5 percent over its level in the same period last year, reaching US$12.9 billion.

The number of servers shipped by all vendors actually rose faster than revenue, up 6 percent to 2.1 million units. But intense competition in the market for RISC and Itanium-based servers forced prices down, Gartner analyst Jeffrey Hewitt said in the report.

The number of RISC and Itanium Unix servers shipped fell 15.5 percent compared to the same quarter last year, cutting revenue by 1.5 percent for that market segment. In comparison, the x86 market was more healthy, rising 7.3 percent by shipments and 6.5 percent by revenue.

IBM did the best job of protecting its turf in that changing market, holding on to 29.8 percent server revenue market share to beat HP's 28.2 percent share. Lagging behind with less than half those figures were Dell, Sun Microsystems and Fujitsu/Fujitsu Siemens. IBM's success came throughout nearly its entire line, with increased sales for its System p, System x and System z, and a decline only in its System i group.

Sun's performance was particularly disappointing for the company, which had hoped to continue a two-quarter streak of double-digit sales gains. Instead, the company posted a revenue rise of 2.2 percent compared to the same quarter last year, reaching US$1.3 billion.

The market looked different when judged by units shipped, where IBM's 14 percent share left it far behind second-place Dell at 21.1 percent. HP ruled, reaching 30 percent share in units shipped for the first time since 2002, largely by increasing its lead over a slumping Dell and posting big gains in one-socket and two-socket x86 servers.

(Robert Mullins in San Francisco contributed to this report.)

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