Gartner: HP Edges Out IBM in Server Revenue, Shipments

Worldwide server revenue topped $13 billion in the first quarter of 2008 with companies buying x86 systems to build large Web data centers, Gartner says.

Hewlett-Packard edged out IBM in both worldwide server revenue and shipments in the first quarter of 2008 as businesses bought x86-based systems to help build out Web data centers and emerging market countries continued to invest in their infrastructure, according to a May 22 report from Gartner.

In the first quarter, HP's server revenue topped $4 billion, narrowly placing the company ahead of IBM, which had revenue of about $3.9 billion, an increase of only 2 percent, according to the Gartner survey. For years, IBM had been beating out all other competition in terms of system revenue, but HP has made up significant ground in the last several quarters.

HP also topped IBM when it came to system shipments. For the quarter, HP shipped 683,433 servers, while IBM shipped 302,057 systems, Gartner found.

Overall, worldwide server revenue hit $13.6 billion, an increase of 4.3 percent from the first quarter of 2007 to the first quarter of 2008. Shipments increased 7.6 percent from the same time period a year ago. While the revenue increases were not as large as in years past, Gartner analysts found that companies continued to replace older x86 models with newer systems.

"There were a number of dynamics that affected the market to produce an initial quarter of growth for 2008," Jeffrey Hewitt, an analyst, wrote in the report. "For example, x86 server replacements were on an upswing as the year commenced, we continued to see build-outs of large Web data centers and emerging-market growth forged ahead."

However, Gartner found that shipments of servers that use RISC and Itanium processors and Unix operating systems fell in the quarter, although revenue increased slightly. In this category, IBM remained the revenue leader, while Sun Microsystems shipped more systems.

HP was helped along by shipments and revenue from its ProLiant line, which uses x86 processors, and its high-end Unix-based Integrity servers. These products helped HP increase its revenue 10 percent compared with last year.

HP also managed to increase its share of the blade server market, which remains the one of the hottest segments of the worldwide server market. For the quarter, HP's blade revenue increased about 13 percent.

After HP and IBM, Dell placed third with $1.6 billion in server revenue, an increase of more than 6 percent, while Sun was fourth with $1.3 billion. Of all the major server vendors, Sun lost revenue, a drop of less than 1 percent. Sun has watched its revenue from high-end servers slip, while IBM has gained new revenue with its Power-based systems.

Fujitsu/Fujitsu-Siemens placed fifth with revenues of $732 million.

In terms of shipments, HP was followed by Dell, which shipped 516,499 systems into the worldwide market in the first quarter. Then after IBM, Sun shipped 84,313 servers, an increase of 6 percent, while Fujitsu's shipments dropped 2.6 percent to about 78,800, according to Gartner.