According to IDC's Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market declined 0.2 percent year over year to $14.5 billion in the fourth quarter of 2005. This was the first year-over-year quarterly decline in revenue since the first quarter of 2003, as year-over-year quarterly compares become more difficult. Worldwide server unit shipments growth slowed modestly to 10.6 percent in 4Q05 when compared with the year-ago period.
Volume systems grew 7.3 percent year over year and the segment continue to be the catalyst for growth for the server market overall, gaining favor with SMB and enterprise customers alike. After four consecutive quarterly increases, revenue for midrange enterprise servers declined 11.5 percent year over year and the high-end enterprise server market showed a 1.7 percent decline year over year, the fifth consecutive quarter of declining revenue for high-end enterprise servers.
The Windows server market continued to show solid growth, with factory revenues increasing by 4.7 percent year over year. Overall, Windows servers accounted for $4.9 billion in 4Q05, representing 33.6 percent of quarterly server market revenue. For all of 2005, Windows server revenues were $17.7 billion, which means that for the first time the Windows server segment modestly exceeded spending for Unix servers as customers deployed more fully configured Windows servers in support of scalable enterprise workloads and server virtualization projects.
Linux servers generated $1.6 billion in quarterly revenue, the fourteenth consecutive quarter of double-digit growth, with year-over-year revenue growth of 20.8 percent. For the full year, Linux server revenues were $5.7 billion, placing it in third place for the first time from an operating system perspective as customers continued to expand the role of Linux servers into an increasingly wider array of commercial and technical workloads.
Unix servers experienced a 5.9 percent decline in factory revenue year over year to $5.0 billion for the quarter with worldwide Unix revenues for the quarter representing 34.3 percent of overall quarterly factory revenue. For all of 2005, Unix server revenues were $17.5 billion, moving the platform from sole possession of first place from an operating system perspective for the first time in more than a decade.
IBM retained the number 1 spot in the worldwide server systems market with 38.4 percent market share in factory revenue, growing its revenue by 0.8 percent when compared to the same quarter one year ago. HP continued to hold the number 2 spot in terms of factory revenue with 26.8 percent share, growing revenue 3.8 percent compared to 4Q04 and gaining 1 point of market share overall.
Dell maintained third place with 9.6 percent factory revenue market share in 4Q05. Dell experienced 7.3 percent revenue growth compared with 4Q04, while fourth place Sun experienced a year-over-year revenue decline of 10.9 percent in 4Q05 to 8.2 percent market share.
Fujitsu/Fujitsu-Siemens earned a fifth place standing in terms of factory revenue with 4.3 percent market share. The Fujitsu Group of companies saw a 10.9 percent factory revenue decline year over year.
In terms of unit shipments, HP maintained the number 1 position worldwide with 30.2 percent server shipment share, growing shipments 8.8 percent year over year. Dell maintained the number 2 spot in terms of worldwide server shipments with 23.3 percent share, up from 21.3 percent.
The x86 server market continued to experience strong growth, with revenue of $6.8 billion worldwide for the fourth quarter of 2005. Factory revenue for x86 servers grew 6.7 percent, while unit shipments grew 13.7 percent to 1.8 million servers. HP led the market with 33.4 percent revenue share due to strong revenue growth of 10.1 percent year over year. The fierce competition between Dell and IBM for the second position in the x86 market ended in a statistical tie, with IBM and Dell each holding approximately 20 percent revenue share for the fourth quarter. Rackable Systems solidified its fourth place position in the U.S. with year-over-year growth of 268 percent. The rapid transformation of the x86 marketplace into a segment that is 64-bit enabled continued with x86-64 based systems accounting for 78.8 percent of all x86 server spending, with factory revenue for x86-64 systems more than doubling year over year.
"The number of AMD and Intel-powered dual core systems each grew by more than double on a quarter-over-quarter basis," said Jed Scaramella, research analyst, Worldwide Server research. "Given customers' intense focus on performance as well as power, heat, and cooling issues in their datacenters, the move to incorporating dual core processors is a natural move as users look to lower costs and increase computing capacity."
The server blade market showed continued growth in the quarter, with shipments increasing by 49.3 percent year over year and factory revenue gaining 56.9 percent year over year. Overall, blade servers, including x86, EPIC and RISC blades, accounted for $667 million in the fourth quarter, representing 4.6 percent of quarterly server market revenue. IBM maintained the number 1 spot in terms of server blade revenues, with 42.7 percent market share, while HP maintained the number 2 position with 35.1 percent share. Dell holds the number 3 position with 11.2 percent share of factory blade revenues.
"Market momentum in the blade market continued in the quarter with blade volumes up 50 percent year over year," said Kelly Quinn, senior research analyst, Worldwide Server research. "Blade shipments increased more than 60 percent year over year in 2005 as IT managers began to adopt blades as a standard building block in their virtual IT infrastructures."
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