IBM Rides HP, Oracle Unix Discord To Become Top Server Vendor: IDC

Worldwide server revenue grew in the third quarter over last year, but that was little comfort to the three of the top five server vendors who saw sales fall during that time period.

IBM rode its strength in the Unix server business to grab market share from feuding rivals Hewlett-Packard and Oracle to move into a statistical tie with long-term server market top dog, HP. However, HP held onto its strong blade server market lead.

IDC on Wednesday reported in its latest Worldwide Quarterly Server Tracker that server vendors sold a total of $12.7 billion worth of servers during the third quarter of 2011.

That represents a growth of 4.2 percent over last year's third quarter sales, the Framingham, Mass.-based analyst firm reported. That represents the lowest year-over-year quarterly growth rate since the first quarter of 2010, mainly because it is compared to strong third quarter 2010 revenue caused by the start of last year's economic recovery, IDC said.

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IDC also reported server unit shipments increased 4.0 percent in the third quarter of 2011 compared to last year, a far cry from the 8.7-percent growth it reported in last year's third quarter.

A massive shift in Unix server market led to a shake-up at the top of the server vendor market share, as IBM's Power server line grabbed significant market share from the Unix server families of rivals HP and Oracle, IDC reported.

IBM capitalized on the long-running dispute between its two Unix rivals caused by Oracle's March decision to stop support development of its software for HP's Itanium processor-based Integrity servers even as it tightened the ties between its software and its own legacy Sun server line.

While the entire server market grew over last year, that growth escaped three of the top five vendors, including Hewlett-Packard, Oracle, and Fujitsu, who actually saw their sales drop over last year.

Hewlett-Packard, which had clear leadership in the server market for several years, dropped to a statistical tie with IBM for the third quarter of 2011 thanks to a fall in server revenue of 3.8 percent to $3.79 billion.

That enabled long-time number two vendor IBM share the top position with HP thanks to its 3.5-percent increase in server sales to $3.793 billion.

Dell retained its number three position with server sales of $1.9 billion, up 13.1 percent over last year.

Rounding out the top five were Oracle, whose sales fell 3.2 percent to $764 million, and Fujitsu, whose sales fell 0.4 percent to $605 million.

The real winners were the vendors in the "Others" categories, which included such up-and-comers as Lenovo and Cisco. Server sales outside of the top five vendors rose 22 percent over last year, IDC said.

The IDC third quarter server revenue results were fairly similar to those released Monday by rival analyst firm Gartner.

In the Gartner report, IBM barely edged HP to take the number one server vendor title with third quarter revenue of $3.85 billion vs. HP's $3.80 billion. Dell was at number three with $1.9 billion, followed by Oracle at $764 million and Fujitsu at $603 million.

The Unix server market grew 1.6 percent during the third quarter to reach $2.6 billion, or about 20 percent of the entire server market. However, IDC said, IBM's Unix server revenue grew 14 percent over last year as a result of grabbing market share from HP and Oracle.

Next: Unix, Blade Servers Real Bright Spots In The Market

IBM, quoting IDC statistics, said in a statement that it now controls 46.3 percent of the Unix market, which is the same share of the market as that of HP and Oracle combined.

That Unix strength gave IBM a 64.7-percent share of revenue in the over-$250,000 server market, IBM said in its statement.

For the third quarter, Windows-based servers accounted for 49.7 percent of total server revenue, while Linux-based servers accounted for 18.6 percent, IDC said.

One real bright spot for the server industry in general and for HP in particular was the blade server business. IDC reported that blade server revenue in the third quarter rose 16.4 percent, while blade server shipments grew 2.4 percent. That resulted in a strong growth in average selling prices.

HP kept is number one position in blade servers with a 51-percent market share, followed by IBM at number two with an 18.5-percent share, Cisco with a 10.7-percent share, and Dell with a 7.2-percent share.

Cisco's rise to the number three blade server vendor is noteworthy given that Cisco entered the market with its UCS platform less than three years ago.

Revenue for x86-based servers worldwide grew 6 percent to $8.7 billion, IDC said. HP remained the overall market leader with a 35.8-percent market share despite a 0.2-percent drop in revenue over last year. It was followed by Dell with a 22.1-percent market share coming off a 13.1-percent growth in revenue, and IBM with a market share of 17.7 percent, IDC said.