Trouble In Server Paradise

There are some slight variations in the latest results for third-quarter server shipments and revenues from Gartner and IDC, but the two research companies agree that IBM seems to have profited at the expense of HP and Oracle. According to Gartner, third quarter server shipments grew 7.2% year over year, with revenue up 5.2% and Big Blue narrowly beating out HP for top revenues. IDC put factory revenue up 4.2% year over year, with shipments up 4%, but also had IBM supplanting HP from its long-held domination of the market.

According to Gartner, HP and Oracle were the only two of the top five vendors (including Dell and Fujitsu) that accounted for almost 85% of third quarter sales that didn't increase revenues. HP dropped 3.6% and Oracle held steady, while IBM took the revenue lead with just over $3.8 billion and a total share of 29.7%, down 0.5% year over year. Most of IBM’s revenue growth came from its Power Systems line, with some contribution by System X. Overall, Gartner says, the RISC/Itanium Unix server shipments declined 6.8%, but vendor revenue increased 3.5% compared with the same quarter last year.

x86 server shipments were up 7.6%, with revenues up 9.3%. HP remained the worldwide shipments leader but saw a 3.1% drop, which was driven primarily by drops in its ProLiant brand, says Gartner. IDC put IBM and HP in a tie for the top spot, with 29.8% and 29.8% factory revenue share, respectively. IBM showed 3.5% revenue growth with particular strength in Power Systems demand, while HP lost 2.5 points of share as factory revenue declined 3.8%, largely because of weakening demand for Itanium-based Integrity systems.

The research company reported a 1.6% revenue growth in Unix servers to $2.6 billion, or 20.1% of the third quarter server revenues. IBM took 5.1 points of market share, to finish the quarter with Unix revenues up 14% year over year. IDC reports improved market conditions for its three server categories: volume, midrange enterprise and high-end enterprise. The volume category increased revenues 5% year over year, followed by midrange enterprise demand, which grew 4.7%, and the high-end enterprise segment, which rose 1.1%.

Dell held onto third place, with 15.1% market share, and was up 1.2 points of revenue share on 13.1% growth, driven in part by richer product configurations. Oracle maintained the No. 4 position with a year over year revenue decline of 3.2% to hold 6% market share. Fifth-place Fujitsu experienced a 0.4% revenue decrease, holding 4.8% revenue share in the third quarter of 2011.

A new category or form factor of servers, hyper-scale, was introduced to this quarter's report to address evolving market demand within large-scale, Web 2.0, hosting and HPC environments. IDC says hyper-scale servers are designed for large-scale data center environments, where parallelized workloads are prevalent, offering streamlined system designs that focus on performance, energy efficiency and density. These servers skimp on the full management features and redundant hardware components found in traditional enterprise servers, as these capabilities are accomplished primarily through software. Hyper-scale server demand grew 8.7% year over year in the third quarter to $428.5 million as unit shipments increased 4.3% to 118,888 servers. Hyper-scale servers now represent 3.4% of all server revenue and 5.7% of all server shipments; 73.6% of all hyper-scale server revenue was generated in the United States in the quarter.

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