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Worldwide server market shows second consecutive quarter of revenue growth

The worldwide server systems market continues to gain ground, showing two per cent revenue growth in the third quar...

December 1, 2003  

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The worldwide server systems market continues to gain ground, showing two per cent revenue growth in the third quarter of 2003, according to IDC’s worldwide quarterly server tracker.

This gain was nearly one percentage point higher than expected, the research firm said. Worldwide server factory revenue topped out at $10.8 billion. It was the second consecutive quarter of positive growth for server revenues worldwide, following nine quarters of decline during the economic downturn.

Overall, server unit shipments grew by 19.5 per cent, reflecting the underlying demand for volume servers, which are small servers priced less than US$25,000.

This demand led to volume server revenue growth of 9.5 per cent year-over-year. Sales of more expensive server systems in the midrange enterprise (US$25,000 to US$499,999) grew revenues by seven per cent year-over-year, and high-end enterprise servers (priced $500,000 or more) declined in revenue by 14 per cent year-over-year.

IDC says it believes this is due in part to IT budget constraints and to shifts in server deployments that favor volume servers.

“Volume servers are generating most of the positive momentum in the worldwide server market,” said Vernon Turner, group vice president of IDC’s Worldwide Server Group.

“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. However, two quarters of positive growth do not necessarily mean that a long-lasting economic rebound is in place.”

IBM Corp. held onto its number one spot in the worldwide server systems market with 31.1 per cent market share in factory revenue, gaining 1.4 points of share year-on-year. Hewlett-Packard Co. took the number two spot with 27.7 per cent share, gaining 0.4 points of share year-on-year.

The gap between Sun Microsystems Inc. and Dell Inc. continued to close with Sun showing revenue share of 10.8 per cent worldwide, while Dell showed revenue share of 9.5 per cent. Dell has been growing its worldwide revenue market share for six consecutive quarters, IDC research shows.