AMD, Intel See Gains in Server Share

Staff Reporter -- Electronic News, 8/24/2006

Growth in the x86 server market continued to moderate during Q2, but AMD gained an even greater share of the space.

That’s according to new figures from analyst firm IDC, which said that overall server market revenues grew 0.6 percent in Q2 year over year to $12.3 billion, marking the first time since Q3 of last year that revenues climbed.

The good news for Intel came in the form of a gain for its high-end processor, Itanium. EPIC or Itanium-based systems grew 36.4 percent year over year generating more than $740 million in revenue for the quarter and now representing 11.7 percent of all non-x86 server revenue, according to IDC.

And AMD scored a win in the x86 server market segment with its Opteron processor accounting for 20.2 percent of all worldwide x86 server revenue for the first time in 2Q06, IDC said. In Q1 AMD achieved the over $1 billion server revenue mark for the first time ever.

IDC said in Q1 that it believes the perceived thermal benefits of AMD systems resonate with IT managers in their initiatives to control the increasing power and cooling costs in the data center.

Overall, volume server revenue in Q2 grew 6.2 percent year over year and continues to represent the only growth segment for the server market overall, IDC said. This was the third consecutive quarter of single-digit growth for the volume server market. The midrange enterprise server segment experienced year-over-year revenue decline of 3.5 percent – the third consecutive quarterly decrease for the segment. Meanwhile, the high-end enterprise server market declined 6.9 percent year over year, the seventh consecutive quarter of reduced spending for this segment.

The move of IT organizations to multicore systems is changing the dynamics of the server space, IDC noted.

"Enterprises continue to deploy both scale-up and scale-out server configurations as part of their core IT strategy,” said Matt Eastwood, program vice president of Worldwide Server Research at IDC. “As evidence of this trend, 1-socket and 32-socket+ configurations grew sharply in the second quarter while all other configurations experienced a year-over-year revenue decline as multicore processors enable 1-socket systems to cannibalize workload from traditional 2-socket systems."

IBM retained its number 1 ranking in the worldwide systems market with 31.0 percent market share in factory revenue, but saw a 2.2 percent year-over-year revenue decline in Q2. HP held on to the number 2 slot with a 27.8 percent share even though revenue fell 1.7 percent compared to the same period a year ago.
Sun enjoyed an upswing for the quarter, gaining significant market share for the second consecutive quarter with 15.5 percent year-over-year revenue growth in 2Q this year. Sun increased its overall market share to 12.9 percent from 11.2 percent in 2Q05 and regained the number 3 ranking in the worldwide server market.

But Dell fell back into the number 4 position with 10.3 percent revenue-based market share in 2Q, representing a 1.3 percent decline in revenue and a loss of 0.2 points of market share overall.

"Sun continued its strong server revenue performance in consecutive quarters and regained the number 3 overall market share position," said Steve Josselyn, research director, Enterprise Server research at IDC, in a statement. "The clear majority of Sun's server revenue is generated from UltraSPARC-based systems, but the growth in the company's Opteron-based products are having a positive impact."

Growth in the x86 server market remained positive in 2Q, but continued to moderate, IDC said. The x86 server market grew 3.3 percent in the quarter to $5.9 billion worldwide, its slowest growth rate in eleven quarters. Unit shipment growth also continued with a moderate gain of 9.8 percent to 1.68 million servers as customers continued to consolidate their IT infrastructures.

IBM, HP, and Sun all posted positive year-over-year revenue growth in the x86 server market. However HP and Sun were the only top 5 server vendors to outgrow the market in 2Q06 – growing factory revenue 3.6 percent and 48.0 percent respectively – and gaining x86 market share in the process. HP led the market with 34.5 percent revenue share and Dell maintained the second place with 21.4 percent revenue share.

"The x86 server segment continues to be the growth engine for the overall server market as customers increasingly migrate workloads to industry-standard infrastructures", said Jed Scaramella, research analyst, Enterprise Server Research at IDC, in a statement. "However, this growth has been tempered by the introduction of technologies such as virtualization and dual-core into the x86 server space. Enterprises are employing these technologies to increase the efficiency of their installed server systems, rather than deploying new systems."