IDC: Worldwide server growth higher than expected

Showing two per cent revenue growth in the third quarter of 2003, the worldwide server market grew faster than expected, according to some figures released on Wednesday by IDC.

The analyst firm had expected one per cent growth in the third quarter, but ended up facing a two per cent increase as the market experienced its second straight quarter of positive growth worldwide. Revenue topped out at US$10.8 billion, up from US$10.6 billion in the same quarter one year ago.

Since peaking during the year 2000, the server market has slumped in the economic downturn post-2000 and had a few years of straight declines, IDC said.

Server shipments have grown by 19.5 per cent, mainly because of an increase in sales on lower-end systems, or servers priced less than US$25,000, IDC said in a statement. Sales of more expensive servers in the midrange enterprise (US$25,000 to US$499,999) grew revenues by seven per cent year-over-year and high-end servers over US$500,000 declined in revenue by 14 per cent year-over-year.

Numbers of units shipped are used to calculate the statistics.

IDC analysts voiced cautious optimism with Wednesday’s numbers.

“This is a good sign, and I think a sign that spending for enterprise IT is on a growth target,” said Mark Melenovsky, program director in IDC’s server group. He predicted that the market would grow by two per cent or three per cent year-over-year next quarter, and that server sales for 2004 would increase by about five per cent over 2003.

For another year, IBM Corp. retained its top position in the worldwide servers market with 31.1 per cent market share on revenue of US$3.4 billion. The company gained 6.6 per cent year-over-year on its server revenue, IDC said.

While Hewlett Packard Co. gained 3.5 per cent year-over-year growth, the company rolled into second place with 27.7 per cent share on US$3 billion in revenue.

Rounding off the top four were Sun Microsystems Inc. and Dell Inc. IDC said the gap between both Sun and Dell was closing, as third-placed Sun had 10.8 per cent revenue share worldwide, and Dell rang in about 9.5 per cent revenue share.

Dell has been growing its worldwide revenue market share for six consecutive quarters, IDC said in a statement.

Growth in Linux server platforms is nearly 50 per cent higher year-over-year, IDC found, generating about US$743 million in the third quarter. This is the sixth consecutive quarter of year-on-year revenue growth for Linux servers.

Also posting growth is the Windows server market, as server sales increased revenues by just over 10 per cent and accounted for about US$3.4 billion in the third quarter and holding onto 31.7 per cent of quarterly server market revenue. Upgrades in the large Windows NT server installed base to Windows 2000 or Windows 2003 was one factor that contributed to the growth, IDC said.

When measured by the number of units shipped, Windows remained far ahead of Linux, with 841,000 Windows servers shipped in the quarter, compared to 210,000 Linux boxes, Melenovsky said.

– With files from IDG News Service