Volume Systems Fuel Server Growth

Server shipments jump 19.5 percent and revenue 2 percent in the third quarter, thanks mainly to the growing popularity of low-cost volume servers.

Server shipments jumped 19.5 percent in the third quarter, fueled by the growing demand for low-cost volume systems, according to numbers released on Wednesday by International Data Corp.

The Framingham, Mass., analyst firm said that revenues from server sales also increased 2 percent during the period, to $10.8 billion. It marked the second consecutive quarter of positive growth for server revenue, after nine consecutive quarters of decline.

"Volume servers are generating most of the positive momentum in the worldwide server market," analyst Vernon Turner said in a prepared statement. "This shows that the IT community has embraced volume server deployments as a mainstream technology to meet a wide range of data-processing requirements and to support a wide variety of computing workloads."

Still, he said, two straight positive quarters "do not necessarily mean that a long-lasting economic rebound is in place."

Revenues from volume server sales—those priced at less than $25,000—grew 9.5 percent over the same quarter in 2002, and the midrange server market ($25,000 to $499,999 in price) increased 7 percent. Revenue for high-end servers—priced at $500,000 or more—dropped 14 percent, in part because of tight IT budgets and the shift by businesses to volume servers, IDC said.

Revenue derived from x86 servers—powered by processors from Intel Corp. and Advanced Micro Devices Inc.—grew 8.3 percent, and shipments jumped 21.4 percent. The blade server space also continues to grow, according to IDC, with 50,000 systems shipped in the quarter and more than 120,000 for the years first three quarters.

Linux- and Windows-based systems both also saw growth, with Linux system revenue jumping 49.8 percent and shipments increasing 51.4 percent. Windows-based systems revenues grew 10.3 percent and shipments increased 21.4 percent. In addition, decline in the Unix market slowed, IDC said, dropping just 3.8 percent in revenue and growing 4.3 percent in shipments. The analyst firm said price competition led to the increase in shipments.

IBM, of Armonk, N.Y., retained its spot as the top server vendor, with almost $3.37 billion in revenue, or 31.1 percent market share. Hewlett-Packard Co., of Palo Alto, Calif., was second, with $2.99 billion, or 27.7 percent share, followed by Sun Microsystems Inc., of Santa Clara, Calif., with more than $1.16 billion, or 10.8 percent share.

Dell Inc., of Round Rock, Texas, was fourth with 9.5 percent share and $1.02 billion in revenue, and Fujitsu Ltd./Fujitsu Siemens rounded out the top five with 6.3 percent share and $684 million in revenue.