Gartner: Server Sales Rock Steady

Modern servers are still a growing component of next-gen data centers, according to new research from Gartner Inc. (see Server Sales Are Up).

About 1.6 million servers shipped in the second quarter of 2004, compared to 1.3 million a year ago, Gartner says. The servers are worth more than $11.5 billion to the industry, up 7.7 percent from last year's revenue of $10.7 billion.

"This is the 11th quarter in a row we've had positive year-over-year growth. So we're definitely coming out successfully from the dotcom bust," says Michael McLaughlin, principal analyst at Gartner.

IBM Corp. (NYSE: IBM) and Hewlett-Packard Co. (NYSE: HPQ) are still the dominant players. Big Blue earned $3.54 billion from servers in the second quarter, while HP took in $3.15 billion. Sun Microsystems Inc. (Nasdaq: SUNW) trailed at $1.5 billion, and Dell Inc. (Nasdaq: DELL) sold $1.13 billion worth.

But in units shipped, the story is different. HP sold more than 463,000 servers in the quarter, blowing away Dell's 338,000 and IBM's 239,000. Sun shipped about 90,500 units.Notably, servers using Advanced Micro Devices's (NYSE: AMD) Opteron processors did very well. "It grew somewhere around 2,000 percent year-over-year," to revenue that's more than half of Intel Corp.'s (Nasdaq: INTC) Itanium sales, McLaughlin says. "When AMD introduced Opteron, it actually opened people's eyes to a different possibility. It definitely has a price/performance benefit."

Projecting server sales for the year, 7 or 8 percent growth is still the target, he says. For the second quarter versus 2003, unit shipments are up 24.5 percent, and a huge 31 percent of those were commodity servers, according to McLaughlin.

Linux continued to grow in operating system share, reaching 9.5 percent of overall server OS revenue. Unix declined to 4.3 percent. Microsoft Corp. (Nasdaq: MSFT) Windows has 34.4 percent.

Unix will still be with us for the foreseeable future. Despite the gains in Linux, "that kernel simply can't do as much as proprietary Unix," McLaughlin asserts.

Evan Koblentz, Senior Editor, Next-Gen Data Center Forum0