IBM Shines As Server Market Continues Recovery

The latest server shipment and revenue numbers (second quarter) are in from both Gartner and IDC, and while the market continues its recovery, some segments and vendors are doing much better than others. Both research companies report strong shipment and revenue growth, and with revenues more than doubling shipments, the average selling prices are growing, too.

Gartner reports server shipments grew 8% (2.3 million units) year-on-year, while revenue more than doubled to 19.5% ($13.2 billion). IDC says shipments were up 8.5% (2.1 million units), but reported the same revenue ($13.2 billion) on a lower revenue growth figure, 17.9%.

Neither shipments nor revenues have returned to to the pre-downturn levels of 2008, says Gartner research VP Jeff Hewitt, but they continue the growth that started last year. x86 servers were up 8.4% in units for the quarter and 17.7% in revenue. RISC/Itanium Unix servers declined 8.5% in shipments but showed a revenue increase of 4.3%, while the "other" CPU category, which is primarily mainframes, turned in a stellar performance, surging 48.8%.

From a revenue perspective, the top five vendors all grew, with HP holding down the top spot (up 11.4% to $3.94 billion), but growing less than half as fast as IBM (up 23.9% to $3.79 billion), says Gartner. Dell came in third ($1.88 billion), followed by Oracle ($936 million) and Fujitsu ($836 million), with the five accounting for 86.1% of the market. Fujitsu showed the biggest growth, up 136.7%, while Oracle was up just 0.8%.

IDC's numbers were similar, but they put IBM in the top spot ($4 billion) over second-place HP ($3.9 billion), and showed similar growth for Fujitsu but better results for Oracle, growing 4.2%. Big Blue was helped by the Unix market, where it grew its revenues 14% in a market that grew only 1.5%, and its System z mainframe revenue that soared 61.1%.Blade server revenues were up 26.9% on just a 6.2% increase in shipments, reports IDC. Almost 90% of all blade revenue is driven by x86-based blades, which now represent 21.2% of all x86 server revenue. HP continued to dominate this market with 51.9% revenue share, while IBM was a distant second with 19.1%, followed by Cisco and Dell with 10% and 8.2%, respectively.

The bottom line, says Gartner's Hewitt, is that the server market is still growing and remains heterogeneous. "While x86 is the main growth driver, Unix and mainframes are still around and substantial. There are separate segments, as well, like the 'classic' organizational data center versus the cloud/service provider; these segments have different characteristics and providers must realize and respond to that."

While he wouldn't cede the non-x86 market to IBM, at the expense of HP and Oracle, Hewitt did say IBM has continued to execute in these particular markets. "Bottom line: IBM is tough in flat-to-declining market situations."

As for Oracle's modest growth in the server market via its acquisition of Sun Microsystems, he doesn't think Oracle is as concerned about the hardware business in and of itself. "They want more control and support dollars from the total stack of their DBMS offerings. In my opinion, this was a very interesting acquisition, and Oracle will do its best to leverage more business from this broader and deeper stack control."

See more on this topic by subscribing to Network Computing Pro Reports Data Centers: Virtual vs. Physical (subscription required).