Rising Tide Of 2010 Server Sales Lifts All Vendors, Except Oracle

Pent-up server demand led customers to buy significantly more servers in the fourth quarter of 2010, giving a big boost to 2010 overall server sales of all the key vendors except Oracle, according to a new report from Gartner.

Gartner on Thursday reported fourth quarter 2010 server shipments grew 6.5 percent compared to the fourth quarter of 2009 to reach 2.4 million units.

Revenue grew even faster year-over-year, reaching $14.7 billion in the fourth quarter of 2010, up 16.4 percent, Gartner said.

The 2010 growth was a combination of pent-up demand and the replacement cycle, said Jeffrey Hewitt, research vice president at Gartner.

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"You had Nehalem come out, and it pushed everything ahead," he said.

This is a sharp contrast to the results of 2009. Gartner last year said that 2009 server shipments were down 16.6 percent compared to 2008, while revenue fell 18.3 percent during the same period.

The strong shipment and revenue growth in the fourth quarter helped drive overall server shipments and revenue for the entire year. For all of 2010, vendors shipped 8.8 million servers, up 16.8 percent over 2009. The total value of those servers reached $48.8 billion, up 13.2 percent over last year.

For all of 2010, Hewlett-Packard retained its ranking as the world's largest server vendor in terms of shipments with a 31.7 percent market share. That mean that nearly one out of every three servers sold worldwide came from HP, which enjoyed a 17.3 percent growth over 2009.

Dell remained the second largest server vendor in terms of shipments thanks to a 21.3 percent growth over 2009. That made Dell the fastest-growing of the top five server vendors for the year. The company accounted for 23.4 percent of all servers sold worldwide.

IBM was third in terms of server shipments, which grew for the company by 12.8 percent to give it a 13.1-percent share of the market. It was followed by Fujitsu, which saw shipments grow 18.8 percent to grab a 3.3-percent share.

The laggard of the top five was Oracle, which early last year got into the server business via its acquisition of Sun Microsystems. Gartner estimated that Oracle sold 162,340 servers in 2010, down 31.6 percent from its 2009 shipments.

In terms of total server revenue for 2010, HP took the lead away from IBM with a growth rate double that of its competitor.

HP sold $15.3 billion worth of servers in 2010, up 18.9 percent over its 2009 sales. IBM, which was the market leader in 2009, slipped to the number two spot with a relatively anemic growth rate of 9.2 percent to reach $15.0 billion.

Dell, in third place, had the strongest growth of the top vendors. Its server sales grew 31.3 percent over 2009 to reach $7.2 billion in 2010. It was followed by Oracle, which saw its server sales plummet 17.7 percent to $3.1 billion, followed by Fujitsu, which grew sales 5.1 percent to reach $2.1 billion.

Next: Blades And Skinless Servers, And The Lousy non-x86 Market

Blade server shipments rose in the fourth quarter of 2010 compared to the same period last year by 6.5 percent, but revenue for those blades rose 23.6 percent.

Blade server vendors can thank the push towards virtualization, Hewitt said. "You're seeing people use more rich configurations for virtualization," he said. "Customers want higher-end blades with more memory."

HP kept its lead in the blade server market by selling 152,000 of the 338,000 blades shipped in the fourth quarter of 2010. It was followed by IBM, Dell, and Cisco. Hewitt said Cisco sold 18,000 blade servers during the fourth quarter of 2010.

Blade server shipment growth was probably not as strong as it might have been thanks to the growing use of "skinless servers," which strip out much of the chassis and electronics to form highly-dense server infrastructures. Hewitt said skinless servers are being used to build cloud computing infrastructures where load balancing is more important than managing of individual servers.

The worldwide server market continued its march towards dominance by the x86 platform. Total x86-based server shipments rose 18.1 percent in 2010 compared to 2009, while revenue grew 28.8 percent during that same period. HP, Dell, IBM, Fujitsu, and NEC took first through fifth place in both categories in 2010.

On the RISC/Itanium Unix side, however, it was a completely different story. There, overall worldwide shipments fell 16.8 percent while revenue fell 11.6 percent, led by a huge 29.3 percent drop in shipments by Oracle, which could take some solace in the fact that all of the top five vendors in this part of the market saw shipment and revenue drop, according to Gartner.

Worldwide server growth was driven primarily by a strengthening of the U.S. market, where 2010 revenue grew 24.5 percent compared to 2009, Gartner said. The Asia/Pacific market also saw strong growth, at 22.4 percent, but not in Japan where the server market dropped 4.4 percent in 2010.