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3/1/2004
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Server Market, Linux Use Show Continued Growth

The worldwide server market posted growth for the third consecutive quarter at the end of 2003, with Linux use continuing to accelerate.

The worldwide server market posted growth for the third consecutive quarter at the end of 2003, with Linux use continuing to accelerate, a market research firm said Friday.

Revenue for manufacturers of the beefy computers used to run business applications increased by 11.4 percent to $13.7 billion in the fourth quarter, compared to the same period a year ago, International Data Corp. said. Unit shipments for the quarter jumped a dramatic 22 percent.

The quarter represented the third consecutive period of positive revenue growth and the first time since the economic downturn began in 2001 that sales were up in all major categories of servers, IDC said. A favorable currency exchange rate was a leading factor in the strong quarterly results. With that factor, however, the market still increased by 3 percent.

The major categories of servers include volume servers priced at less than $25,000, midrange enterprise servers, $25,000 to $499,999; and high-end enterprise servers, $500,000 or more.

Volume servers led the market in revenue and unit growth, showing how many companies are choosing to run clusters of the low-cost option to handle some of the most demanding applications.

"Volume server capabilities are driving into several tiers of the computing infrastructure," IDC analyst Vernon Turner said in a statement. "It shows that high-end server technology has cascaded to this market, and that infrastructure is being augmented by industry standards and IT is reaping the benefits."

For the full year, server revenue increased by 3.2 percent to $45.7 billion, while unit shipments rose 18.3 percent to 5.3 million units.

Servers running Linux, the open-source operating system increasing in popularity in the enterprise, generated $960 million in quarterly revenue. Revenue from Linux servers increased 63.1 percent year-over-year, while unit shipments jumped 52.5 percent.

The increase in unit and revenue for Linux servers indicate that the systems are being used for a wider variety of applications and more powerful configurations are being sold in the market, IDC analyst Jean Bozman said.

"The implication is that the mix of products may be changing somewhat," Bozman said in an interview. "There are more powerful configurations in the product mix, and, as you watch the Linux market develop, it is taking on a greater variety of workloads."

Bozman, however, was quick to point out that Linux's main rival Windows also showed strong growth. Revenue from the servers running the Microsoft Corp.-owned operating system rose 16.1 percent year-over-year and unit shipments gained 23.3 percent. Windows servers accounted for $3.9 billion in the fourth quarter, representing 31.7 percent of the server market revenue.

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