Financial services proved the most lucrative part of the enterprise server market in 2006, growing by 3 percent and accounting for more than $13 billion in revenue, according to new research by Gartner.
IBM, helped by its System z mainframes, held the top spot with a 44 percent share of the financial services market. Hewlett-Packard placed second with 26 percent of the market and Sun-Microsystems rounded out the top OEMs with 9 percent.
Gartner, which is based in Stamford, Conn., released its latest report on the server market on March 14.
Kiyomi Yamada, an analyst at Gartner, said financial services, which includes investment services, banking and insurance companies, has continued to heavily invest in IT infrastructure to meet storage requirements and also to comply with government regulations, such as the Sarbanes-Oxley Act.
"Many of these institutions also find that security, identity management and fraud are huge issues for them," Yamada said. "These issues are a particularly large driver of sales in the U.S. In addition, many banking institutions have global offices and these companies have to utilize global resources, which creates a huge market for storage and servers."
The financial services market accounted for $13.2 billion in vendor revenue in 2006. That number meant that this particular space accounted for a quarter of the entire server market, according to Gartner.
Telecommunications, which accounted for $7 billion of vendor revenue, was the second largest segment of the market, while government revenues accounted for 11.5 percent of the market and $6 billion in sales.
IBM held the top spot among IT vendors and collected $5.9 billion in financial services revenue.
"IBM has been traditionally strong in banking, especially with its System z mainframes," Yamada said. "The company introduced some new System z servers in 2006 and that went very smooth. IBM also has several low-end systems that were able to penetrate the financial markets."
HP collected $3.5 billion in server revenue from the financial services market, while Sun earned $1.2 billion in revenue and watched its share of the market grow 26 percent compared to 2005.
The reason for Suns growth is two-fold. First, the company and its products had a resurgent year in 2006. In addition, financial companies have found merit in the companys servers based on its UltraSPARC T1 "Niagara" chips, Yamada said.
At the same time, HP did not have its best year within the financial services space. This, according to Yamada, was primarily due to delays in offering new Itanium-based systems since Intel did not deliver its "Montecito" processors on time.
HP will likely come back later this year when these new systems are finally brought to the market, Yamada said.