Unix Server Sales Tumble
Experts report the Unix market is slipping by between one-fifth and one-quarter in Q3 -- at a time when other server segments seem to be stabilizing.
Can anything staunch the bleeding in the Unix server space?
According to the latest tallies from market watchers Gartner Inc. and IDC, the Unix market continues to contract dramatically.
In Q3 of 2009, IDC says sales of Unix servers -- an umbrella category that includes systems powered by commodity x64 and IA64 chips, as well as systems based on proprietary architectures -- slipped by almost one-quarter, dropping 23.4 year over year. Gartner's tally is only slightly less pessimistic: it has Unix sales off by just over one-fifth (21.2 percent) from the year-ago period.
One irony is that Unix systems -- almost alone among server categories (with the exception of blade systems) -- seemed at one point to be bucking an otherwise dismal economic trend. The nine months encompassing Q4 of 2008 through the second quarter of 2009 comprised one of the ugliest stretches in server market history: all hardware categories were down, including sales of Unix servers.
On the other hand, Unix revenues suffered less than did sales of volume x86 servers -- in the early going, at least. One upshot of this was that the Unix share of server market revenues paradoxically increased in Q4 of 2008, accounting for 36 percent of quarterly revenue, compared to just 33 percent in Q4 of 2007.
True, conceded IDC research vice president Jean Bozman, Unix sales did dip during the same period; this was nothing, however, next to the battering experienced in the volume server segment took. "[T]he share of total revenue shows continued investment in Unix servers, where customers have invested so deeply over the years to support mission-critical workloads," she concluded.
The spin eight months ago was that an ebbing tide lowers all boats, but while the Unix segment lost revenue (if not share) during the server market sloughing of late 2008 and early 2009 -- ebbing with the rest of the market -- it didn't benefit from a making tide this time around. Yes, worldwide server sales were down in Q3 by a disquieting 15 percent (per Gartner's numbers) to 17 percent (per IDC's tally) year over year. On a sequential basis, however, sales of server hardware increased by between 12 and 13 percent, according to IDC and Gartner, respectively.
That's the largest bump in sequential growth since 2005, according to IDC. It suggests that -- while happy days aren't exactly here again -- the IT spending-scape seems to be stabilizing, researchers from both Gartner and IDC conclude. "The worldwide server market exceeded expectations in the third quarter with improving x86 server demand leading the way, which was driven in part by the infrastructure refresh momentum that is building in many geographies. In fact, x86 server revenues experienced their largest sequential quarterly revenue increase in nearly five years," said Matt Eastwood, group vice president of Enterprise Platforms at IDC, in a statement.
"[P]latform migration is once again gaining steam in the market and the post-recession server deployment patterns will establish the technology agenda in the datacenter for the next business cycle," Eastwood continued. "For server vendors, after five quarters of market contraction, the next few quarters will be critical to determining the technology platform winners and losers in the years ahead."
There's a downside to this, however, for Unix champions. For the moment, the market seems to have selected against Unix servers. Sales of x86 servers -- volume x86 shipments were hardest hit in the server market free-fall that commenced late last year -- recovered nicely, according to both Gartner and IDC. Although other vulnerable categories (including Big Iron mainframes) posted less-than-reassuring numbers, Unix proved to be the biggest turkey in Q3. At least one server category -- the blade segment -- actually managed to grow its revenues in the third quarter, according to researchers. IDC, for example, has blade sales inching up by 1.2 percent, even as overall blade shipments declined.
The upside is that Q4 is traditionally a big quarter for Unix servers: large shops like to put off server upgrades until the end of the year, according to IDC. That accounts, in part, for the (relatively) strong performance of Unix systems late last year. There's still plenty of competition in the Unix segment, too. What's interesting -- and what's potentially great for customers -- is that long-time Unix kingpin Sun Microsystems Inc. and perpetual Unix market-comer Hewlett-Packard Co. are now being clearly outpaced by upstart IBM Corp.: market watchers have Big Blue firmly athwart the Unix heap with about 40 percent of overall share, followed by HP (at just under 30 percent) and Sun (at less than 25 percent).
Sun is a particularly peculiar case. Thanks to the uncertainty attending its pending acquisition by Oracle, the Unix stalwart has had to slash prices to remain competitive. One upshot of this is that Sun was actually the Unix volume market leader in Q3, according to Gartner. With IBM continuing to pull away; with Sun vulnerable -- and with its notionally fidgety customer base up for grabs -- and with HP eying a return to Unix market leadership, the stage is set for a pricing war in the coming quarter.