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5/28/2010
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Server Shipments, Revenue Increase

After a two-year slump, server shipments are up more than 23% year-over-year and factory revenue increased almost 5% in the first quarter.

Factory revenue in the global server market rose in the first quarter, ending a nearly two-year slump brought on by the economic recession.

Market researcher IDC reported Friday that revenue in the quarter reached $10.4 billion, 4.7% higher than the same period a year ago. The year-over-over increase was the first in seven quarters.

Meanwhile, the growth rate of server shipments soared in the quarter. Factories shipped 23.3% more servers than a year ago, compared to a 1.9% increase in the fourth quarter of 2009. The latest increase was the fastest year-over-year quarterly server shipment growth in more than five years.

Leading the rising market are sales of x86 commodity servers, which businesses are buying to upgrade their infrastructures. Commercial sales plummeted during the recession, as businesses delayed purchases.

IDC expects the market recovery to eventually extend to the higher-end Unix and mainframe segments in the second half of the year, when businesses are expected to start longer-term planning to adapt to major technology shifts now underway. Examples of ongoing changes include the industry move toward cloud computing.

"We are in the middle of one of the sharpest periods of market inflection in a decade and we expect significant shifts in technology usage and market shares to occur as the recovery continues," IDC analyst Matt Eastwood said in a statement.

Rising x86 sales kept Hewlett-Packard in the number one slot with a 32.5% revenue share, IDC said. HP revenue rose 16.3% year over year and gained 3.3 point of share from a year ago.

IBM held the number two spot with a 27.5% share, as factory revenue fell 1.2%. IBM's decline was the result of weak sales for its Power systems and System z servers, brought on by customers waiting for the end of a product refresh cycle, IDC said.

Higher sales of x86 servers among small and medium-sized businesses led to a strong 51.9% revenue increase for third-place Dell, which gained 5.1 points to end the quarter with a 16.3% market share.

Sun Microsystems and Fujitsu ended the quarter in a statistical tie for fourth. Sun, which was acquired by Oracle in January, saw a year-over-year revenue decline of 31.9% to end the quarter with a 6.6% market share, while Fujitsu experienced a 2.2% increase to capture a 6.5% share.

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