HP Leads Server Field

HP and IBM continued their battle for the top spot in a worldwide server market that declined 3.6 percent in revenue over the past quarter.

Hewlett-Packard Co. and IBM continued to battle for the top spot in a worldwide server market that declined 3.6 percent in revenue over the past quarter, according to numbers released Friday by analyst firm International Data Corp.

According to the survey by the Framingham, Mass., firm, during the first three months of the year, HP gained the No. 1 spot, with more than $2.9 billion in revenue and 28 percent of the market share. The company, which bought Compaq Computer Corp. in May 2002, saw revenues drop 7 percent over the previous quarter. Among the largest OEMs, only IBM and Dell Computer Corp. showed revenue gains over the same period a year ago, and Dell was the only top-tier OEM not to see revenue drop from the last quarter of 2002, with revenue remaining flat. IBMs revenue for the quarter was almost $2.7 billion, a 39 percent drop from the previous quarter but a 7 percent jump over the same period last year, and enough for a 25.5 percent market share.

Dells server revenue came in at $985 million, a 15 percent jump over the same period last year. The Round Rock, Texas, company garnered 9.3 percent of the market. Sun Microsystems Inc., of Santa Clara, Calif., had more than $1.3 billion in revenue—a 15 percent drop from last year—with 12.8 percent market share.

Overall, revenue in the server market dropped 4 percent over the past year, to more than $10.5 billion, according to IDCs numbers. Where the market showed the strongest growth was in the volume server area, where systems are priced below $25,000. That area grew almost 10 percent, with the burgeoning blade server space growing in both revenue—by 483 percent, to $86 million for the quarter—and shipments—343 percent, to 29,685 units sold. IBM, of Armonk, N.Y., led in blade server revenues, while HP, of Palo Alto, Calif., was tops in units sold. Dell was in third place in both categories.

IDC analysts said the upward trend in sales in the small server area indicated a continued desire on the part of cost-conscious IT administrators to keep expenses down by incrementally adding to their existing infrastructures.

"The IT marketplace is still adding capacity, but it is doing so with low-cost, rack-optimized servers that fit within todays restricted IT budgets," IDC analyst Vernon Turner said in a prepared statement. "Worldwide server sales in the first quarter were in step with traditional seasonality, following a stronger fourth quarter. But they also reflect new buying patterns for server systems that have emerged during the economic downturn of 2001-2002."

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