IDC: Dell Bounces Back in the Server Space

Dell's server line sales rebounded in the second quarter, although IBM and HP continue to dominate the market.

With a new enterprise strategy in place, Dells line of server products had a rebound in the second quarter of 2007, with the companys revenues climbing 20 percent compared with the same period last year, according to the latest survey by IDC.

In its report on the worldwide server market, which was released Aug. 23, IDC found that Dell gained back some of the market share it had lost in the server space. For the quarter, the Round Rock, Texas, companys revenues were about $1.5 billion, or a 20.2 percent increase from the second quarter of 2006.

Dells share of the market stood at 11.6 percent for the quarter, according to IDC, which is based in Framingham, Mass.

For the second quarter of 2007, IBM and Hewlett-Packard still continued to dominate the market. Big Blue led all vendors in server revenue with more than $4 billion, an increase of more than 6 percent compared with last year, and a market share of 31 percent, according to IDC.

HP finished second for the quarter with revenues of $3.7 billion, an increase of 8 percent, and the company claimed a 28 percent share of the worldwide server market.

Overall, IDCs quarterly server report mirrored a similar study released by Gartner on Aug. 21. For the quarter, worldwide server revenue stood at $13.1 billion, an increase of more than 6 percent compared with the second quarter of 2006. The market was helped along by volume x86 systems and blade servers.

/zimages/4/28571.gifClick here to read more about Gartners study.

Matt Eastwood, an analyst with IDC, said many companies have begun to refresh their data center hardware and vendors benefited from that development during the quarter.

"Overall, it was a fairly balanced quarter, and all the different vendors seemed to hit their sweet spots during this time," Eastwood said.

In Dells case, the company was helped by a new strategy for its enterprise business. Eastwood said the company seemed to focus more on specific segments, such as servers specifically designed for controlling cooling costs and energy savings, instead of trying to build systems that would fit the needs of every different customer. Eastwood added that Dell did not drop its prices toward the end of the quarter, which helped its margins.

"They [Dell] seem to be much more in tune with the market, and they really tried to optimize some of their products and reposition others," Eastwood said.

IBM was helped by revenue from its System z mainframe systems, as well as its System x and System p offerings. At the same time, HPs ProLiant and BladeSystem products boosted the Palo Alto, Calif., companys bottom line.

While volume servers helped the market along, blades remained the hottest part of the server space. Blade revenues increased more than 36 percent compared with last year. HP held the No. 1 spot in the blade market at 47.2 percent, while IBM placed second with a 32.3 percent share.

The revenue of non-x86 servers, such as RISC- and EPIC-based systems, fell 2.3 percent, according to IDC. Revenues from the sales of both Linux- and Windows-based systems increased, according to the report.

Among the worlds top five vendors, Sun Microsystems also had a respectable quarter, with revenues increasing 5.6 percent for a total of $1.7 billion. The company was helped by its UltraSPARC-based T1000 and T2000 systems, along with its x86 products.

/zimages/4/28571.gifSun has just released its Niagara 2 chip. Read about it here.

Fujitsu/Fujitsu Siemens was the only top 5 vendor to watch its market share fall in the second quarter. The companys revenues fell 2.3 percent compared with last year.

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