HP Gains on IBM in Server Revenue

Hewlett-Packard continued to gain ground on IBM in 2007 when it comes to server revenue, although Big Blue still managed to dominate all other system vendors, according to an analyst report.

In a report released Feb. 27, IDC analysts found that for 2007, worldwide server revenue topped $54 billion for the year, an increase of 3.6 percent compared to 2006 and the highest annual total since the market peaked at $61 billion in 2001. In the fourth quarter, server revenue grew 2.4 percent, to $15.7 billion.

A similar report from Gartner also valued the server market at $54 billion in 2007.

As the continuing arms race between the two top vendors ramps, IBM’s server revenue for the year topped out at $17.3 billion, an increase of about 1 percent over 2006. HP continued to gain on its rival, with system revenues hitting $15.4 billion in 2007, an increase of a little more than 8 percent.

While many analysts have written that the slowing U.S. economy might begin to curb IT spending in 2008, the IDC report found that enterprises, along with midmarket and smaller businesses, continued to buy servers throughout 2007 to help with consolidation, virtualization and other data center projects.

IDC found that x86 servers drove much of the growth in the fourth quarter of 2007, with revenues of $7.8 billion. However, blade systems remain the hottest part of the market, growing 54.2 percent year-over-year in the fourth quarter, generating $1.2 billion in revenue.

IBM saw increases in revenue from its System x and System p servers in the fourth quarter of 2007, while HP’s ProLiant and Itanium-based Integrity systems also grew at a healthy pace, according to IDC.

In terms of operating systems, IDC found revenue from Microsoft Windows-based servers grew 6.9 percent in the fourth quarter, to $5.7 billion. At the same time, Unix server revenue grew 1.5 percent, to $5.2 billion, while Linux revenue hit $2 billion for the first time – an increase of more than 11 percent from the fourth quarter of 2006.

For 2007, Dell’s server revenue topped $6 billion, an increase of 12.4 percent, while Sun Microsystems saw revenues of $5.8 billion, an increase of 1.9 percent. Fujitsu/Fujitsu Siemens saw server revenue fall less than 1 percent, to $2.7 billion.

In the fourth quarter of 2007, IBM’s revenues hit $5.8 billion, while HP’s topped out at $4.3 billion. Dell had revenues of $1.6 billion, while Sun’s revenues dropped 2.4 percent to $1.5 billion. Fujitsu’s grew 7 percent to $666 million during the same time period.