Blades sharpen up global server sales

Demand for blades and high-end enterprise servers has driven the strongest global server sales growth in 12 months, research has reported.

IDC's latest Worldwide Quarterly Server Tracker reported that factory revenue in the worldwide server market grew 3.5 percent year over year to US$12.9bn in the third quarter of 2006, the fastest growth rate in a year and the largest third-quarter spending on servers since the third quarter of 2000.

Worldwide demand for server blades was largely responsible for this market growth, with year-over-year growth of 29.9 percent.

Overall, blade servers including x86, EPIC and RISC blades, accounted for US$738m in the third quarter, representing 5.7 percent of quarterly server market revenue.

X86 blades exceeded 10 per cent of all x86 server revenue for the second consecutive quarter.

High-end enterprise server revenue grew 9.1 percent year over year, which represented the primary growth engine for the server market overall and the first positive growth for the segment since the third quarter on 2004.

The report found that virtualisation continued to drive slower growth in the volume server market in the third quarter with spending growing a modest 3.8 percent year over year.

Revenue for midrange enterprise servers declined 2.3 percent year over year, marking the fourth consecutive quarterly decrease in that segment.

"Enterprise and SMB customers alike continue to evolve their IT buying patterns based on the robust product innovation that continues to occur across the marketplace," said Matt Eastwood, program vice president of enterprise platforms at IDC.

"For end-users, new levels of compute density mean increased power densities and expanding power and cooling challenges, which are driving different IT infrastructure acquisition patterns.

"For technology suppliers, this inflection point represents an opportunity for the vendors best equipped to innovate their systems, software and services offerings and meet these challenges."

The study estimates year-over-year server unit shipment growth at 7.4 percent, the ninth consecutive quarter of slowing overall shipment growth.

Microsoft Windows servers continue to show "nice growth" with revenues increasing 4.6 percent year over year.

Linux server revenue was US$1.5bn for the quarter as growth continues to "moderate", with year-over-year revenue growth of 5.4 percent.

Although Linux servers now represent 11.8 percent of all server revenue, revenue growth for the quarter was approximately one sixth the growth rate observed in 3Q05 as volume market growth moderates and year-over-year compares become more difficult, IDC observed.

Unix servers experienced a 1.7 percent decline in factory revenue year over year.

In vendor terms IBM maintains the number one spot in the worldwide server systems market with 33.1 percent market share in factory revenue. Big Blue grew its revenue by 6.6 percent when compared to the same quarter one year ago.

HP continued to hold the number two spot in terms of factory revenue with 27.7 percent share, a 2.1 percent year-over-year revenue decline driven by difficult fiscal to calendar quarter conversions.

Dell and Sun ended the third quarter in a statistical tie for the number three position. Dell experienced 3.8 percent year-over-year revenue growth in 3Q06 and captured 10.5 percent market share for the quarter.

Sun captured 10.0 percent market share in 3Q06 on the basis of strong year-over-year revenue growth of 15.8 percent.

Sales were strong in most regions with Asia/Pacific (excluding Japan) and EMEA showing "particularly strong demand" growth of 13.7 percent and 4.8 percent respectively.

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