Gartner says server sales up a tiny bit in Q3

While server shipments have been up a healthy amount in recent quarters, what we have been all looking for as sellers and consumers of servers is an up turn in server revenues. If vendors are actually making money selling servers, that is a pretty good indication that the economy is on the mend. Well, if server stats are an economic barometer, then the latest numbers from Gartner's Dataquest unit would seem to indicate that the economies in North America, Europe, and Asia are stabilizing.

According to the latest Dataquest server sales statistics for the third quarter, worldwide server sales were up 0.6% to $11.1bn. Growth, even miniscule, is better than decline. That revenue growth, according to Joseph Gonzalez, one of the server analysts at Dataquest who put together the Worldwide Server Quarterly Statistics database, was driven in large part by a 23% increase in server shipments. This increase in shipments, he says, is coinciding with a shift towards smaller machines that rival the power of larger and more expensive boxes from a few years ago.

On a worldwide basis across all server architectures, IBM Corp was the top server vendor in Q3 with $3.5bn in sales, up 4.7% from last year and up 9.9% from the second quarter of 2003. Hewlett-Packard Co was the number two vendor, according to Dataquest's estimates, with $3.1bn in sales, up 1% year-to-year and up 2% sequentially. Sun Microsystems Inc remains the number three-server vendor in the world, when ranked by sales, with $1.2bn in revenues, but its sales were down 14.2% in the quarter and down 20.7% sequentially. Dell Inc grew its sales by 21.8% to $992m, making it the fastest growing company in the server space yet again and putting it within spitting distance of Sun. If you are wondering why Sun is targeting Dell with entry-level products, it is because Dell is hammering away at the installed base of Sun Unix servers with Lintel and Wintel machines.

On a platform basis, Dataquest reckons that the Windows server market grew by 12% to $3.8bn in the third quarter, giving Windows platforms a 34% share of all the platforms sold in Q3. Part of this growth for Windows is due to upgrades from vintage Windows NT and old Windows 2000 systems to Windows 2003 machines. Companies are consolidating machines to try to cut software and administration costs. HP was the dominant Windows server supplier, with $1.3bn in sales and 9.6% growth. Dell's Windows server business grew by 22.1% in the quarter to $735m; IBM was third with $686m in sales and 11.8% growth.

The Linux server market grew at 39.6% in the quarter to $817m, making it once again the fastest growing portion of the server market. However, Linux has not yet come close to knocking out Windows or Unix as the top server platform. IBM raked in $260m in Linux server sales according to IDC, followed by HP with $234m and Dell with $128m.

Gonzalez believes that the shipment growth we have seen in the past few quarters in the server market is sustainable given that many aging machines need to be replaced and the improving states of the economies around the world. However, whether or not substantial revenue growth is achievable is anyone's guess. If companies loosen their IT purse strings a little more as conditions improve, they may start doing bigger projects requiring bigger or at least more iron. Gonzalez says that as far as he is concerned, the server market is stabilizing, but he will not consider it recovered until server makers start pumping up revenues and pulling in some profits. This probably will not happen until late 2004 - if at all.

This article is based on material originally produced by ComputerWire.

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