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Server Costs Continue Falling

If you were hoping that server prices would continue declining during the current economic turmoil, here's the answer to your prayers: the latest market research shows that prices continued downward during the first quarter of 2008. However, the price slide did boost server unit sales.
If you were hoping that server prices would continue declining during the current economic turmoil, here's the answer to your prayers: the latest market research shows that prices continued downward during the first quarter of 2008. However, the price slide did boost server unit sales.If you believe that server purchases cannot be deferred the moment someone whispers "belt tightening," you'll be pleased to know that two million others agreed with you in the first quarter; that's how many servers were sold during the first three months of the year.

Dueling market research firms Gartner and IDC both reported strong sales growth in the first quarter. Gartner reported that unit shipments were up 7.6 percent compared with Q1 2007to 1Q07, while IDC reported a figure of 7.8 percent.

Even better, they reported that the rate of increase in revenue growth for vendors was about half the rate of the rise in unit sales, indicating that prices fell steadily.

IDC reported that the sector with the highest growth was Linux servers, which experienced a revenue growth rate of 8.4 percent, making them 13.7 percent of the market by revenue. However, Linux remains far behind Windows server systems in total sales -- nearly 40 percent of the market.

At the other extreme, the Unix share of server market revenue actually fell nearly a point, according to IDC. Unix still represents 30.6 percent of the market, though. For example, HP reported strong sales of Unix systems in China and India as those countries built out their infrastructures.

In terms of form factors, blade servers experienced an astounding revenue growth rate of 53.7 percent, amounting to 8.2 percent of the server market, according to IDC.

It will be interesting to see what the figure will be for the second quarter, with rising gas prices sucking up disposable cash, especially for smaller businesses.
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Mary E. Shacklett, President of Transworld Data
James M. Connolly, Contributing Editor and Writer