HP server revenue falls in turbulent quarter, Gartner says

Worldwide server revenue grew 5.2 per cent in the third quarter of 2011, but declined for Hewlett-Packard Co., Gartner Inc. said in a report on server sales during the quarter that ended Sept. 30.

HP’s quarter was a restless one. It fired one CEO and hired another and left the market wondering whether it was going to sell or spin-off its PC division, a move it later rejected .

In this same quarter, IBM Corp.’s revenue share of the worldwide server market reached $3.85 billion, a 3.5 per cent increase from a year ago. That gave it 29.7 per cent of the worldwide market, nudging it ahead of HP for the top spot.

HP’s server revenue, just over $3.8 billion, declined 3.6 per cent from a year ago, leaving it with 29.3 per cent of the world’s market, according to Gartner. Third-place Dell Inc., meanwhile, grew 6.3 per cent in server revenue during the period to more than $1.9 billion; it now has 14.7 per cent share of the worldwide market.

Meg Whitman, the former CEO of eBay who was appointed in September as HP’s new CEO, told financial analysts last week that HP needs “be simpler, clearer, and more consistent — no more surprises.”

Whitman cited the importance of innovation in selling products. Pointing to HP’s recent introduction of low-energy servers, Whitman said the company is increasing its investment in research and development.

HP has been hurt by Oracle Corp.’s decision to discontinue software development on the Itanium processor, the company acknowledged.

“Our ability to close deals has been impacted by Oracle’s Itanium decision,” said HP’s CFO, Cathie Lesjak, said during last week’s call.

Gartner said that RISC-based systems and Itanium servers declined 6.8 per cent worldwide, but vendors overall saw revenues increase 3.5 per cent. Oracle, which picked up Sun Microsystems’ SPARC line, was in fourth place in revenue on Gartner’s list, with nearly $764 million in server revenue. It had 6.2 per cent of the market, unchanged from a year ago.

When measured by server shipments, HP saw a 3.1 per cent decline in the third quarter to 693,265 shipments. It remains the leader in that category, followed by Dell, which increased shipments by 3.2 per cent, to 517,867, and IBM, which saw no percentage change in shipments. IBM had 287,507 shipments, according to Gartner.

Market share as measured by shipments put HP at 29.2 per cent of the market, Dell, 21.8 per cent and IBM, 12.1 per cent, Gartner said.

In Western Europe, beset by a financial crisis, server sales fell nearly 5 per cent; that decline was offset by gains in other regions, including in Eastern Europe.

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