Server Market Stays Strong in Q3

By Colleen Taylor -- Electronic News, 11/22/2006

The worldwide server market enjoyed robust growth in Q3, according to reports released this week by market research firms International Data Corp. (IDC) and Gartner Inc.

According to IDC's worldwide quarterly server tracker, factory revenue in the worldwide server market grew 3.5 percent over Q3 2005 to $12.9 billion, the fastest growth rate in four quarters and the largest Q3 spending on servers since the Q3 2000, the firm said. IDC said that shipments increased 7.4 percent year-over-year.

Gartner's numbers reflected an even stronger Q3. The firm reported worldwide server revenue growth of 4.4 percent year-over-year, totaling $13 billion for the quarter. Gartner also reported that worldwide server shipments for Q3 reached more than 2 million units, an increase of 9.1 percent over the same quarter last year.

Both firms attributed much of the quarter's growth to blade servers and x86 servers. "Blade servers and x86 servers in total continue to produce the highest growth levels within the overall market," Jeffrey Hewitt, research director at Gartner, said in a statement. "Both of these server types show ongoing installation growth at the front and middle of the Web server tiers."

Leading the pack in both firms' rankings was IBM Corp., which holds about a third of the entire server market share and posted year-over-year revenue growth that hovered around 7 percent, according to IDC and Gartner. HP followed behind in both rankings, holding about a quarter of the market share.  Dell Computer Inc., Sun Microsystems and Fujitsu Corp. rounded out the top five in both firms' rankings.

According to IDC, Microsoft Windows servers continued to show increases as revenues grew 4.6 percent year over year. Linux server revenue was $1.5 billion in Q3, a year-over-year revenue growth of 5.4 percent. Unix servers, however, experienced a 1.7 percent decline in factory revenue year over year, IDC said.

In the x86 market segment, AMD-based server revenue grew 79.7 percent year-over-year, accounting for 19.8 percent of all worldwide x86 server revenue in the quarter, IDC said. Not to be outdone, Intel gained x86 market share sequentially for the first time in four years, and Intel-branded processors maintained 80.2 percent of all x86 server spending in the quarter, according to IDC's report.