The server market remains strong but industry research shows unit shipment rates slowing as companies buy fewer, but more powerful, machines.
The effects of virtualization, the emergence of multicore processing and other consolidation efforts are evident in server sales and market share numbers in IDC's Worldwide Quarterly Server Tracker report for the third quarter, released Wednesday.
A similar trend toward slower server unit sales growth is seen in a third quarter server report released Tuesday by Gartner.
IDC reports that overall server revenue grew by 3.5 percent from the year-earlier quarter to US$12.9 billion, the fastest growth rate in four quarters.
But IDC analyst Jed Scaramella points to slower unit sales growth, particularly for industry standard servers, as evidence of virtualization and other data centre consolidation efforts by customers.
"We have started to see unit shipment in the x86 market tempered a little bit," Scaramella said. Unit shipments of x86-based servers grew by 8.8 percent in the third quarter, down from 9.8 percent in the second quarter and 11 percent in the first.
Virtualization is the process of enhancing server utilization by running multiple applications on the same physical server. Without it, some servers only operate at 15 percent to 20 percent of capacity.
Companies are also buying new servers with dual-core or quad-core processors that offer more computing power than older models with single-core processors. Thus, customers can enhance their data centres' capability with fewer servers, Scaramella said.
The IDC and Gartner numbers show no change in the market share rankings, based on revenue, of the leading server vendors.
IBM led with 33.1 percent market share on a 6.6 percent revenue increase to US$4.28 billion, compared to the year-earlier quarter. Hewlett-Packard Co. held onto second place with a 26.3 percent share as its revenue declined 2.1 percent to US$3.4 billion. Dell holds a 10.5 percent share on a 3.8 percent revenue increase to US$1.36 billion. Sun Microsystems followed closely with a 10 percent share on a healthy 15.8 percent jump to US$1.3 billion.
Scaramella says Sun has rebounded from weakness a year ago, when its sales fell by 5 percent. Since then, Sun has introduced its Niagara line of servers and servers running Advanced Micro Devices's Opteron processors, a rival to the dominant Intel processor.
"Overall, Sun has been focused on performance per watt. They've been at the forefront of it," Scaramella said.
Fujitsu Computer Systems ranked fifth with 5.3 percent market share on a 9 percent revenue decline to US$690 million. The remaining vendors collectively held a 14.9 percent share on 4.4 percent revenue growth to US$1.93 billion.
Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, Third Quarter of 2006
(Revenues in millions)
| Vendor | Q3 2006 | Market share | Q3 2005 | Market share | Growth Q3/06-Q3/05 |
|---|---|---|---|---|---|
| IBM | US$4,279 | 33.1 % | US$4,013 | 32.1 % | 6.6 % |
| HP | US$3,398 | 26.3 % | US$3,472 | 27.7 % | -2.1 % |
| Dell | US$1,357 | 10.5 % | US$1,308 | 10.5 % | 3.8 % |
| Sun | US$1,295 | 10.0 % | US$1,118 | 8.9 % | 15.8 % |
| Fujitsu, Fujitsu/Siemens | US$690 | 5.3 % | US$758 | 6.1 % | -9.0 % |
| Others | US$1,925 | 14.9 % | US$1,843 | 14.7% | 4.42 % |
| Total | US$12,945 | 100 % | US$12,513 | 100 % | 3.5 % |
| IDC's Worldwide Quarterly Server Tracker, November 2006 | |||||