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Linux, Windows Gain in Server Space

Posted by iTech - 2006-02-24

Global server sales increased in 2005 despite a sluggish fourth quarter, with volume systems driving sales, according to research firm IDC, which also reported that Linux and Windows both showed strong growth in the server space.

For the full year, server revenue grew 4.4 percent to $51.3 billion, while worldwide shipments grew 11.6 percent to 7 million units. IBM maintained its lead with a 32.9 market share, followed by HP with a 27.7 percent share.

IDC said factory revenue in the server market fell 0.2 percent year to year to $14.5 billion in the fourth quarter of 2005, marking the first year-over-year quarterly decline since the first quarter of 2003.

Linux Maintains Momentum

Linux servers generated $1.6 billion in quarterly revenue, the fourteenth consecutive quarter of double-digit growth, with year-over-year revenue growth of 20.8 percent. For the full year, Linux server revenue was $5.7 billion, rising to third place for the first time as businesses found new ways to deploy Linux servers.

Windows server sales hit nearly $18 billion in 2005, topping spending for Unix servers for the first time ever. Windows servers accounted for $4.9 billion in the fourth quarter. At the same time, Unix server sales were $17.5 billion, a figure that moves the platform out of first place for the first time in more than a decade.

"We are seeing an emergence of growth in volume servers, particularly x86 products, with enterprises moving to smaller systems that can be tied together," said IDC analyst John Humphreys. "The beneficiaries are Windows and Linux, both of which have a momentum in the x86 platform."

While Linux has enjoyed sustained growth in the server space, the open-source OS still faces the challenge of gaining a foothold in mission-critical enterprise environments.

Bullish on Blades

IDC noted that businesses are using a blend of operating systems, not only because each platform offers its own advantages in terms of workloads and customer preferences, but also because there is substantial overlap in terms of applications that run on many of these server platforms.

The x86 market reached $6.8 billion worldwide for the fourth quarter of 2005. HP led the market with 33.4 percent, while Dell and IBM are neck-and-neck, holding 20 percent shares for the fourth quarter.

Blade servers continue to enjoy popularity as shipments rose 49.3 percent and factory revenues were up 56.9 percent. IBM still is top dog in blade-server sales, with 42.7 percent market share, while HP is second with a 35.1 share, and Dell is third with an 11.2 share.

"Momentum in the blade market continues, with shipments growing by 60 percent from 2004 to 2005," Humphreys said. "While IBM only has 20 percent of the x86 market, they benefit more from the shift to blade systems, given their dominance there."

Humphreys also noted that AMD is doing well in the server market, with Opteron-based systems rising to 10 percent of the x86 market in 2005 from 4 percent in 2004.

IBM Still on Top

IBM retained the top spot in the worldwide server-systems market with 38.4 percent market share. HP is second with a 26.8 percent share, and Dell maintained third place with 9.6 percent share in the fourth quarter.

Sun Microsystems, in fourth place, experienced a year-over-year decline of 10.9 percent in the quarter to 8.2 percent market share.

In terms of unit shipments, HP maintained the top spot worldwide with a 30.2 percent share. Dell maintained its second-place spot with a 23.3 percent share.

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