HP Tops in Server Market
Server market contracts; Unix server revenues plunge—again
The first quarter tallies for 2003 are in, and Hewlett-Packard Co. topped IBM Corp. and Sun Microsystems Inc. for the lead in overall server market revenue, according to research from International Data Corp. (IDC).
HP’s success belied a dismal quarter in which its own server revenues shrunk by 11.7 percent over Q1 2002. Overall server market revenues declined, lead by still another precipitous drop in Unix server revenues.
For Q1 2003, IDC found that HP controlled nearly 28 percent of the overall server market (with $2.94 billion in sales), followed closely by IBM ($2.68 billion) with a 25.5 percent share. In contrast to HP, Big Blue grew its revenues at a near seven percent clip over its Q1 2002 totals.
IBM made other gains at HP’s expense in Q1 2003: Palo Alto, Calif.-based HP gave up 2.6 percent of its market share while IBM gained 2.5 percent since last year.
In addition to RISC-Unix and Intel-based servers, the overall server market also encompasses big-ticket items, such as zSeries mainframes and iSeries minicomputers, both of which traditionally combine to give IBM a revenue edge over other vendors. Although IDC didn’t break out iSeries and zSeries sales, the market research firm’s numbers indicate Big Blue posted approximately $950 million in revenue not explicitly attributed to sales of Unix, Intel, Linux, or blade servers.
Elsewhere last quarter, Sun was a distant third, with 12.8 percent share on $1.35 billion in revenue. The Unix computing giant’s share of overall server market revenues dropped by 15.3 percent since Q1 2002.
Overall, IDC found that thought server market revenues declined by 3.6 percent in the last year, unit shipments increased by 11.5 percent, fueled largely by an uptick in sales among entry-level (sub-$25,000) servers.
"The continued strength in the volume server space shows that the IT marketplace is still adding capacity, but it is doing so with low-cost, rack-optimized servers that fit within today's restricted IT budgets," said Vernon Turner, group vice president for Global Enterprise Server Solutions at IDC, in a prepared release.
Not surprisingly, IDC found that Dell Computer Corp. posted the strongest showing during Q1, growing its revenues by 15 percent over its Q1 2002 total on sales of $985 million—good for 9.3 percent of the overall server market. Unlike HP, IBM and Sun, IDC’s tallies for Dell are based exclusively on sales of Intel-based servers. Although Dell garnered only one-third as much revenue as server market leader HP, it shipped 20 percent fewer units.
According to IDC, Microsoft Corp.’s Windows and the open source Linux operating environment were the chief beneficiaries of the sharp uptick in low-end server sales. Sales of Microsoft’s Windows-based server operating system increased by 10 percent in Q1 2003, tallying $3.2 billion. Linux-related revenues exploded by 35 percent, topping off at $583 million. HP led in Linux server shipments, with $185 million; Dell finished second, at $124 million; and IBM was third with $91 million.
Unix sales plunge
Spikes in low-end shipments of Windows and Linux servers couldn’t offset still another decline in Unix server revenues, which IDC said were off by 11 percent from Q1 2002. That follows a decline in Unix server revenues of 9.2 percent from Q4 2001 to Q4 2002.
For the first quarter of 2003, the race was tight: HP topped Sun in Unix server revenues by a one-tenth of a percentage point—31.6 percent to 31.5 percent. IBM brought up the rear with a 21.6 percent share.
HP’s share of the Unix server market also dropped by 1.2 percentage points, followed by Sun with a 1 percentage point decline. IBM, again, bucked the trend, growing its Unix server market share by 4.9 percentage points.
Still in flux
In Q4 2002, IDC said that HP and IBM had both displaced Sun as Unix server market champs, with each controlling 30 percent of revenues. At the time, IDC indicated that Sun garnered a 28 percent share (see http://info.101com.com/default.asp?id=544).
Control of the Unix server market has shifted back and forth among HP, IBM, and Sun over the last 18 months. IBM, for example, has twice surged ahead of competitors in the Unix server market during the fourth quarter of a calendar year, first in Q4 2001 and then in Q4 2002.
According to IDC, companies generally enjoy a better sales cycle during the final quarter of their fiscal years. The fourth quarter of IBM’s fiscal 2002 coincided with the fourth quarter of calendar year 2002, while Sun’s fourth quarter coincides with the second quarter of the calendar year.
Although IBM collected 26.9 percent and 30 percent of overall Unix server revenues during the fourth quarters of 2001 and 2002 respectively, its performance has been flat at other times. During Q1 2002, for example—when IDC says that HP rebounded to control the overall Unix market with 32.4 percent of server market revenues—IBM garnered a 16.7 percent share. In the second quarter of 2002—which marked the last quarter of Sun’s fiscal year—Sun grabbed a 39 percent share, according to IDC. During the same period, IBM was third with a 20 percent share, trailing HP with 30 percent.
Stephen Swoyer is a Nashville, TN-based freelance journalist who writes about technology.