Server Sales Down, Vendors Claim Victory

Bad news continues for IT economy; the worldwide market for servers dropped 26% last quarter.

• By Chris McConnell
• 03/12/2002

While the recession may well be over, bad news continues for the IT industry. Last week, market research firm IDC said the worldwide market for servers dropped 26% in the fourth quarter 2001, compared to the same quarter a year ago.

IDC’s Worldwide Quarterly Server Tracker said server revenues in the fourth quarter were a paltry $12.6 billion, compared with $16.9 billion in 2000. Declines in unit shipments were less dramatic, falling only 7% to 1.143 million machines.

IDC names IBM Corp. the top dog in the server market, pinning 32% of the overall server market to Big Blue. IBM also remains the king of high end servers, with 28% of sales. The high-end server market declined by 4% year-over-year, markedly less than some subsectors, and IDC attributes the slow drop to demand for IBM’s zSeries line of mainframes.

IBM share of the Unix market grew, which it was quick to point out in a press release issued Monday. Big Blue said it gained 2% of revenues, while rival Sun Microsystems Inc. lost 5.7% points of share. According to IDC, IBM and Sun were neck-and-neck for the Unix market in the fourth quarter, with 26.9% of the market going to IBM and 26.8 going to Sun. IDC says this is the first time IBM has held the top spot in the Unix market since the fourth quarter of 1998.

Sun issued a press release Friday reminding the world, it was still the number one Unix vendor for the year. It said it sold 263,927 servers last year. The release noted its Sun Fire line of servers grew 90% compared to the third quarter of last year. Sun says this outpaces IBM’s pSeries line, but this may not be an apples-to-apples comparison, since pSeries is IBM’s entire Unix line, while Sun Fire only includes Sun servers based on its new UltraSparc III processor.

Hewlett-Packard Co. also made a respectable showing the Worldwide Quarterly Server Tracker. IDC says it ranked third in the overall Unix market for the fourth quarter, with 25% of revenues, and second for the entire year. HP trumpeted its lead in the midrange market in the fourth quarter, saying it outgunned Sun and IBM for these customers.