Gartner: Worldwide server revenues grow slightly in Q2

Worldwide server revenue was up nearly 5 percent year over year for the second quarter of 2005, with IBM  continuing to lead the overall pack of vendors in revenue, according to research released Wednesday by Gartner.

Worldwide revenue for servers was $12.15 billion compared with $11.6 billion in last year’s second quarter, according to Gartner. IBM had sales of $3.7 billion for the period, followed by Hewlett-Packard (HP) with $3.53 billion, Sun Microsystems with $1.45 billion and Dell with $1.34 billion.

Though IBM led in revenue figures, HP led in units, with 493,910 server shipments for the quarter, followed by Dell with 423,195 shipments and IBM with 277,232 shipments. This reflects the typical market trend, because HP sells more low-end or “volume” servers than IBM does, said Gartner analyst Michael McLaughlin.

The rest of the results for the quarter also were in line with usual market dynamics, he said. The revenue lead in the Unix server market shifted hands, with Sun overtaking HP for the lead, but the shift was due to a typical seasonality factor, not any major gain in Unix server revenue for Sun, he said. The second calendar quarter coincides with the last quarter of Sun’s fiscal year, so a final sales push at Sun’s typically drives its revenue higher in that period.

More important to note about Sun’s results in the quarter is that the company’s revenue from RISC-based servers was down 9 percent year over year, from $1.48 billion in 2004 to $1.34 billion in 2005, McLaughlin said. Because the bulk of Sun’s servers, save its handful of Advanced Micro Devices Inc. Opteron-based products, are built on its Sparc proprietary RISC architecture, “it’s a bad sign when they decline in [this category] because there is no way to make it up in other products,” he said. HP’s revenue in this market was down 8 percent year over year, but the company is not as dependent on its RISC-based servers as Sun is, he added.

On the other hand, IBM, made notable year-over-year gains in RISC servers, with $1.65 billion in revenue for the quarter, a 21 percent gain over the same period last year, when the vendor took in $1.3 billion. McLaughlin said IBM’s Power5 chip architecture is probably the main factor for its growth in this segment, and IBM’s growth in turn is driving gains in the overall RISC-based server market.

IBM also continued to lead in the blade server market, which experienced the most year-over-year growth of all the server market segments for the quarter. In the 2004 second quarter, total revenue in the blade server market was about $281 million, which grew to almost $482 million in 2005’s second quarter, a gain of 33 percent, according to Gartner.