Server market expanded in 2005

Worldwide server revenue rose in 2005 driven largely by increased sales of x86-based servers, according to figures released by market research firms Gartner and IDC Research this week.

Worldwide server revenue in 2005 grew 4.5 percent to $51.7 billion, while server shipments grew 12.7 percent to 7.6 million units from the previous year, according to Gartner. IDC estimates revenue grew 4.4 percent to $51.3 billion, while shipments grew 11.6 percent to 7 million servers.

Although the two research firms’ numbers vary, the overall message was the same: lower-end servers based on x86 microprocessors from Intel and Advanced Micro Devices continue to outpace sales of midrange and higher-end enterprise servers.

Revenue for the x86 server market grew 11 percent year-over-year to $25.7 billion, while shipments were up 14.3 percent to 7 million units, according to Gartner. Revenue for RISC-Itanium Unix servers remained about flat year-over-year, increasing 0.5 percent to $15.4 billion, while shipments were down 5.3 percent to 460,000 units, said Gartner.

“These are trends we see continue in the market with the shift to lower-priced machines; the higher-priced machines just aren’t selling as well,” said Jeffrey Hewitt, research director for Gartner’s enterprise systems group, in Stamford, Connecticut.

“Systems priced above $25,000 are slowing down pretty dramatically, as customers are moving dollars over to x86-based volume systems,” said John Humphreys, program manager for enterprise servers with IDC, in Framingham, Massachusetts.

The usage of x86 systems in high-performance computing, cluster implementations, virtualization and Web serving are among factors driving the increased sales, said researchers.

IBM continued to lead the server market with 32.1 percent revenue share followed by Hewlett-Packard, at 28.2 percent, Dell, with 10.5 percent and Sun Microsystems Inc. with 9.6 percent share, according to Gartner. IDC reported similar figures, with IBM accounting for 32.9 percent of the market, HP with 27.7 percent, Dell with 10.3 percent and Sun with 9.5 percent.

For the fourth quarter of 2005, Gartner reported that worldwide server revenue rose 3.5 percent from the same year-ago quarter to $14.7 billion, while IDC’s figures placed revenue relatively flat from the same year-ago quarter, down 0.2 percent to $14.5 billion.