According to IDC's Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market grew at 8.1 percent year over year to $12.5 billion in the third quarter of 2005, marking the tenth consecutive quarter of positive overall revenue growth. This demonstrates continuing end-user investment in a robust server infrastructure as a fundamental component of other IT investments in software, storage and services.
Volume server revenue grew 14.8 percent year over year and continues to represent the primary growth engine for the server market overall. Revenue for midrange enterprise servers grew 3.8 percent year over year, marking the fourth consecutive quarterly increase in that segment. However, the high-end enterprise server market showed a 1.2 percent decline year over year, making it the fourth consecutive quarter of declining revenue for high-end enterprise servers.
"Although there was continued IT investment across all three server classes, the volume and midrange enterprise server segments are showing the strongest growth, speaking to IT purchasers' continuing focus on cost containment, which is often achieved through strategic server consolidation and server virtualization initiatives," said Matt Eastwood, program vice president of Worldwide Server Research at IDC. "Both scale-out and scale-up models for adding computer capacity are in place at most customer sites, giving IT managers flexibility in the way they install, deploy and maintain server-hardware resources."
Top-Level Server Market Findings
- Year-over-year unit shipment growth of 11.3 percent - two-thirds the year-over-year unit growth rate observed in 3Q04 - reflects a transition in the volume-server market segment as a growing number of users implement virtual servers requiring increasingly robust server resources, which effectively drives higher average selling values and lower unit growth.
- Linux servers posted their thirteenth consecutive quarter of double-digit growth, with year-over-year revenue growth of 34.3 percent and unit shipments up 20.5 percent . Although, both factory revenue growth and unit growth have cooled from 2Q05 levels, it is clear that customers continue to expand the role of Linux servers into a broader range of workloads in both the commercial and technical segments of the market.
- Microsoft Windows servers continued to show strong growth, as revenues grew 17.7 percent and unit shipments grew 15.3 percent year over year. Significantly, quarterly factory revenue of $4.6 billion for Windows servers represented the largest single segment of the server market for the first time - increasing revenue share by 3.0 percent over 3Q04 - as customers deploy more fully configured Windows servers in support of scalable workloads and consolidation projects.
- UNIX servers experienced a 0.4 percent decline in factory revenue year over year, while unit shipments declined 13.7 percent when compared with 3Q04. Worldwide UNIX revenues of more than $3.9 billion for the quarter represented 31.7 percent of overall quarterly factory revenue. This contrasts with 2Q05 - historically a strong quarter for UNIX spending - which saw a strong seasonal surge of IT investment in midrange enterprise UNIX servers and high-end enterprise UNIX servers.
Overall Server Market Standings, by Vendor
- IBM maintains the number one spot in the worldwide server systems market with 32.3 percent market share in factory revenue, growing its revenue by 10.3 percent when compared to the same quarter one year ago. HP continued to hold the number two spot in terms of factory revenue with 27.8 percent share, growing revenue 12.4 percent compared to 3Q04.
- In terms of unit shipments, HP maintained the number one position worldwide with 28.8 percent server shipment share, growing shipments 6.4 percent year over year. Dell maintained the number two spot in terms of worldwide server shipments with 23.9 percent share, up from 22.2 percent share in 3Q04.
- After several quarters of a statistical tie for third place in factory revenue, Dell assumed third place on its own with 10.5 percent market share in 3Q05. Dell experienced 11.8 percent revenue growth compared with 3Q04, while Sun experienced an 7.6 percent year-over-year revenue decline in 3Q05 to 8.7 percent market share.
- Fujitsu/Fujitsu-Siemens maintained a fifth place standing in terms of factory revenue, with 6.1 percent market share. The Fujitsu Group of companies saw 5.9 percent factory revenue growth year over year.
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