IDC: Server Surge a Sign of Turnaround

IDC says worldwide server revenues grew for the fourth straight quarter, a sign that servers are a priority in rebuilding infrastructures.

The worldwide server market saw revenues grow for the fourth consecutive quarter in the first quarter, another indication of the economic turnaround, according to research firm International Data Corp.

IDCs numbers, released Friday, reflect similar trends found by analyst firm Gartner Inc. in a report earlier this week.

The overall global server market grew by 7.3 percent over the same period last year, to $11.5 billion, and shipment growth was pegged at 22.4 percent, according to IDC, in Framingham, Mass.

"IT spending is clearly trending upward and IT organizations are beginning to rebuild their computing infrastructure," IDC analyst Vernon Turner said in a prepared statement. "Following nearly three years of slowed spending during the economic downturn, we see that server systems are a priority in these rebuilding efforts."

IDCs report indicated growth in most server markets, with x86 systems revenue growing 14.1 percent to $5.1 billion and shipments jumping 23.5 percent to more than 1.3 million servers. In addition, 64-bit x86 systems—the market in which Advanced Micro Devices Inc.s Opteron processor plays—grew 35.1 percent in units shipped.

"Although this category accounted for less than 2 percent of the total x86 market in Q104 this space is expected to expand rapidly by 2005," analyst Mark Melenovsky said in a prepared statement.

Top-tier support for Opteron and Intel Corp.s decision to offer 64-bit extensions in its 32-bit Xeon processors—starting this quarter with the release of Nocona—are key reasons for the expected growth, as are platform support for 64-bit Windows and Linux.

/zimages/1/28571.gifClick here for more on Intels 64-bit extensions in Xeon.

Linux servers grew 56.9 percent in revenue—to almost $1 billion—and 46.4 percent in shipments. The Linux market has surged since the second half of 2002, indicating that businesses are adopting the open-source operating system despite concerns about scalability, according to analysts.

The Windows market also showed growth, with revenues and shipments growing 16.4 percent and 26.5 percent, respectively. In addition, while the Unix market shrunk in the United States and Western Europe, it showed strong growth in Asia and Japan, fueled by increased spending in such areas as telecommunications, government and business, according to IDC.

Still, Unix revenue globally declined 3 percent, to $4.1 billion.

Regarding the vendors, IBM, of Armonk, N.Y., retained its title as the top revenue generator, with more than $3.4 billion—a 20.5 percent increase from the same time last year—and 29.7 percent market share.

Hewlett-Packard Co. was second, with $3.1 billion, followed by Sun Microsystems Inc., of Santa Clara, Calif., at $1.17 billion and Dell Inc., of Round Rock, Texas, at $1.12 billion.

However, HP, of Palo Alto, Calif., was first in units shipped, IDC said.

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