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IT Trends | Research

Linux Leads Server Growth

While worldwide expenditures on server hardware declined in the first quarter, server unit shipments actually increased, led by double-digit growth in Linux-based systems. HP, IBM, and Dell were the dominant players, according to two reports released in the last week.

According to market research firm Gartner, overall server shipments grew just 1.5 percent in the first quarter of 2012 compared to the first quarter of 2011, reaching 2.346 million units. Gartner estimated factory revenues for the quarter at $12.44 billion, a decrease of 1.8 percent compared with the first quarter of 2011. Market research firm IDC, in a separate report, estimated a 2.7 percent increase in unit shipments to 2.0 million units, with a 2.4 percent decline in factory revenues to $11.8 billion.

Winners: Linux, Windows
IDC noted positive demand for both Linux- and Windows-based servers. According to information released by the firm: "Linux server demand was positively impacted by high performance computing (HPC) and cloud infrastructure deployments, as hardware revenue improved 16 percent year over year in 1Q12 to $2.4 billion. Linux servers now represent 20.7 percent of all server revenue, up 3.3 points when compared with the first quarter of 2011."

Based on revenue, demand for Windows-based servers was up 1.3 percent in the quarter, accounting for 50.2 percent of all quarterly server revenues, an increase of 1.8 points from Q1 2011, according to IDC.

While Unix-based servers represented 18.3 percent of all revenues for the first quarter of 2012, the category saw a double-digit decline from Q1 2011, down 17.2 percent to $2.2 billion, IDC reported.

"The Unix server refresh has largely ended as the Unix server market is in decline again, driven by workload consolidation and migration to competing platforms," said Kuba Stolarski, research manager, enterprise servers at IDC, in a prepared statement. "Recent heightened awareness of the future of Itanium is also pressing down on customer demand for non-x86 servers, and price competition is helping to drive down revenues in this segment. IDC expects the Unix server market to stabilize over the next few years and remain a smaller, specialized segment of the overall server market."

Platforms: x86 Sees Single-Digit Growth
Non-x86-based servers also experienced a double-digit decline in the quarter, according to IDC. "The market for non-x86 servers, including servers based on RISC, EPIC (Itanium-based), and CISC processors, declined 16.1 percent year over year to $3.4 billion in 1Q12," IDC reported. "This is the third consecutive quarter in which non-x86 servers have exhibited a revenue decline. Non-x86 based systems now comprise 28.5 percent of the server market, the lowest level ever reported in IDC's quarterly server tracker."

x86-based servers, meanwhile, continued to experience growth. Said said Jeffrey Hewitt, research vice president at Gartner: "x86 servers forged ahead and grew 1.7 percent in units in the first quarter of 2012 and 5.6 percent in revenue. RISC/Itanium Unix servers declined 5.7 percent in shipments and dropped 15.2 percent in vendor revenue compared to the same quarter last year. The 'other' CPU category, which is primarily mainframes, showed a decline of 16.4 percent in vendor revenue."

According IDC's Worldwide Quarterly Server Tracker, growth in the x86 standard server market was weakened in the first quarter "in advance of Intel's Xeon E5 dual-socket server processor launch in March." The market research firm reported x86 unit shipments of 1.9 million servers worldwide for the first quarter, an increase of 3.2 percent over Q1 2011. Factory revenues reached $8.4 billion in the quarter, an increase of 4.5 percent.

IDC also reported increases in blade server shipments and revenue, including x86 blades. Blade server shipments increased 4.8 percent in the quarter, with a revenue increase of 7.3 percent (to $2 billion). IDC said more than 90 percent of all blade server revenues were derived from x86-based systems, with x86 blades representing 21.3 percent of all x86 server revenues.

Top Server Manufacturers: HP, IBM, Dell
HP, IBM, and Dell dominated the server market in the first quarter, according to both IDC and Gartner.

Gartner placed HP first in unit shipments for the quarter at 685,015 units, a decline of 0.4 percent. HP had 29.2 percent of the market in terms of units. Dell, at a 21.5 percent share , came in second in Gartner's estimation, with 503,450 units shipped--a decline of 1 percent from Q1 2011. IBM, at a market share of 11.4 percent, saw a decrease in unit shipments of 1.7 percent to 267,556. Meanwhile, No. 4 Fujitsu grew 12.7 percent in the quarter to 86,360 units and a market share of 3.7 percent. Cisco, rounding out the top 5, saw a 70.9 percent growth to 40,498 units and a 1.7 percent market share. All other vendors totaled 763,205 units shipped in the quarter, an increase of 2.7 percent.

In terms of revenues, however, Gartner placed IBM in first place with $3.49 billion in revenues and a 28.1 percent market share, a revenue decline of 7.2 percent. HP dropped to second with a 9.7 percent decline in revenues to $3.46 billion, ending the quarter with a market share of 27.8 percent. Dell's revenues declined 1.9 percent, maintaining third position with revenues of $1.86 billion and a market share of 14.9 percent. Oracle dropped off 7.4 percent, remaining in fourth place with revenues of $739.8 million and a market share of 5.9 percent. Fujitsu was the only top-5 vendor to see positive revenue growth. The company increased revenues 4.5 percent to $618.8 million and a Q1 2012 market share of 5 percent. All other vendors totaled a bit more than $2.275 billion in the quarter, an increase of 26.5 percent.

IDC told a slightly different story. The firm placed HP in the top slot with revenues of $3.46 billion (a decline of 9.8 percent from Q1 2011) and a market share of 29.3 percent. It placed IBM in second with $3.22 billion in server revenues (-7.3 percent) and a market share of 27.3 percent. Dell ($1.84 billion in revenues, -2 percent for the quarter), Oracle ($718 million, -7.3 percent), and Fujitsu ($614 million, an increase of 7.3 percent) rounded out the top 5. The remaining vendors accounted for $1.95 billion in revenues, an increase of 25.8 percent, according to IDC's reckoning.

"The server market worked through a transitional period in the first quarter of 2012 as suppliers prepared to introduce numerous critically important x86 server offerings. At the same time, difficult year-over-year compares helped distort some results across other segments of the market," said Matt Eastwood, group vice president and general manager, enterprise platforms at IDC, in a prepared statement. "Regionally, Americas was flat year-over-year while EMEA experienced a sharp double-digit decline in server spending. However, the larger concern for server vendors was the sharply lower revenue growth in Asia/Pacific, including China. China is one of only three countries that regularly spend more than $1 billion quarterly on servers and any sustained reduction in revenue growth would be troubling for the market."

Additional details can be found at gartner.com and idc.com.

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