Server Shipments, Sales Rise Despite More Virtualization: Gartner

Server sales and shipments showed strong growth in the first quarter of the year compared to last year despite continued growth of the use of server virtualization technology, according to analyst firm Gartner.

Jeffrey Hewitt, research vice president at Gartner, of Stamford, Conn., said that certain factors are "masking" the impact of server virtualization.

First, Hewitt said, a lot of the growth in physical server sales is coming from an explosion in the use of certain applications such as Web servers, which often do not lend themselves to being virtualized.

Also, server virtualization is still much more accepted in mature markets such as the US, Europe, and Australia, and less adopted in fast-growing markets such as China, he said.

Additionally, customers are not running server virtualization on old hardware. "Customers are buying larger servers to host virtualization," he said. "This market is so hungry for more and more horsepower. Virtualization makes it easier to host more and faster applications."

HP was the world's top server vendor during the first quarter of 2008, but fast growth in server shipments by Dell puts that company within striking range of the top position.

Gartner on Thursday said that a total of 2.3 million servers were sold in the first quarter, up about 7.6 percent over the 2.1 million shipped during the same quarter last year.

Revenue growth was not as strong, however. Vendors sold $13.6 billion worth of servers during the quarter, up only 4.3 percent compared to the $13.0 billion in server sales last year, Gartner said.

Hewlett-Packard, Palo Alto, Calif., shipped the most servers during the quarter, accounting for 30.1 percent of the total worldwide shipments. Dell, Round Rock, Texas, was second, with a 22.7 percent market share. However, Dell's shipments grew 15.8 percent over last year compared to HP's growth of 7.8 percent.

Rounding out the top five were IBM, Armonk, N.Y., with 13.3 percent of worldwide shipments; Sun Microsystems, Santa Clara, Calif., with 3.7 percent; and Fujitsu and Fujitsu Siemens Computers, Tokyo, Japan, with 3.5 percent. Of the top 5, only Fujitsu/Fujitsu Siemens saw a drop in market share, down 2.6 percent compared to last year.

HP took over the top space in terms of worldwide server revenue from IBM with a strong 10.3 percent growth in revenue over the first quarter of last year compared to IBM's 2.1 percent growth. That gave HP a 29.6 percent of the worldwide server revenue compared to IBM's 28.9 percent share, Gartner said.

Rounding out the top five were Dell with its 6.6 percent revenue growth, followed by Sun and Fujitsu/Fujitsu Siemens. Of the five, only Sun saw revenue dip compared to last year.

HP remains the world's primary supplier of x86-based servers, with a 30.9 percent of the market in terms of shipments and a 35.3 percent of the market in terms of revenue. Dell, IBM, Fujitsu/Fujitsu Siemens, and NEC Corp., Tokyo, Japan, rounded out the top five in both shipment and revenue.

Worldwide RISC-based and Itanium- based server shipments slipped 8.4 percent compared to last year, with all top five vendors seeing a drop in sales. However, revenue for this class of servers grew 3.7 percent over last year, with all top five vendors seeing revenue growth except for Sun, which saw revenue drop as its Solaris Unix-based focus continues to shift more towards x86-based servers, Hewitt said.

Shipments of servers with the Linux operating system grew the fastest year-over-year, up 13.9 percent compared to the 6.8 percent growth of shipments of servers with Windows, Hewitt said. However, the overall base of Linux-based servers is still only half that of Windows-based servers, so in terms of absolute numbers, Windows- based server shipments grew faster.

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