IDC: Server Market Cooling Off

The worldwide server market continued to cool during the first three months of 2006 according to research firm IDC, with revenues falling 1.9 percent year over year to $11.9 billion. This was the second quarter of revenue decline, and follows two and a half years of growth.

Volume server revenue grew 6.3 percent year over year, which was the slowest growth in more than three years. Revenue for mid-range enterprise servers declined by 16.2 percent, the second consecutive quarter of decline, and high-end servers by 3.2 percent, the sixth consecutive quarter.

"Although customers continued to invest in new infrastructure in the quarter, IT spending patterns are evolving and these shifts are clearly having an impact on the server market," IDC server research vice president Matt Eastwood said.

Digging deeper, Microsoft continued to see gains in the server space with a 5.9 percent increase in revenue, and 12.9 percent shipment growth. Unix servers saw a decline of 7.1 percent in revenues, and 8.7 percent decline in shipments over the year ago quarter.

However, Linux continued to come on strong, with revenue growth of 17 percent and shipments up 14.4 percent. Overall, Windows controls 37.1 percent of server revenue, Unix 33.2 percent, and Linux 12.2 percent.

By brand, IBM and HP have moved into a statistical tie, with a 28.1 and 27.9 percent share respectively. IBM lost a half a point in market share, while HP gained 0.4 percent. Dell continued to make gains, with 11.1 percent of the market, and Sun also increased to 10.8 percent. Fujitsu rounded out the top five, with a 6.9 percent market share.

IDC had praise for Sun and its new marketing strategies. "Sun's server revenue growth and market share gains are an indication that the company's most recent product strategies are beginning to resonate with customers," the firm's enterprise server research director Steve Josselyn said in a statement.

IBM also lauded the latest numbers, saying it validated the company's business strategy. "As hybrid x86 systems rapidly gain traction, IBM has leveraged our System x investments in R&D and channel enablement," said Susan Whitney, general manager, System x. "IBM's innovation in virtualization and power optimization is increasingly a competitive differentiator in x86 servers."