Sun recoups server market share

Long-suffering No. 3 server maker gains at the expense of IBM, Hewlett-Packard and Dell.

Sun Microsystems, which for years has lost ground to rivals, was the only one of the big four server sellers to gain share in the second quarter of 2006, new figures show.

The Santa Clara, Calif.-based company's server revenue rose 15.5 percent to $1.59 billion in the quarter , according to statistics from research firm IDC. The increase outpaced the overall growth of 0.6 percent to $12.29 billion worldwide, with faster gains in x86 servers, blade servers and lower-end models costing less than $25,000.

Sun's three main rivals fared worse. In contrast, IBM's revenue dropped 2.2 percent to $3.42 billion; Hewlett-Packard's dropped 1.7 percent to $3.4 billion; and Dell's dropped 1.3 percent to $1.27 billion.

Sun has been striving to turn around its core server business for years after seeing its revenue and relevance plunge during the dot-com crash earlier this decade. Among its recent moves has been the introduction of its "Galaxy" line of x86 servers using Advanced Micro Devices' Opteron chips and its UltraSparc T1 "Niagara"-based servers that run many threads of simultaneous instructions with low electrical power consumption.

But a more important part of Sun's recovery was from high demand for its mainstream servers using its UltraSparc IV+ chip, upgraded last week with 1.8GHz models . IBM is fighting back with faster Power5+ processors across its entire Unix server line , while HP will respond in coming weeks with Intel's faster but delayed "Montecito" version of Itanium .

Servers using x86 chips such as AMD's Opteron and Intel's Xeon were the "growth engine" of the overall market, with a 3.3 percent increase to $5.9 billion. But new technologies have slowed buying behavior, IDC analyst Jed Scaramella said in a statement.

"This growth has been tempered by the introduction of technologies such as virtualization and dual-core into the x86 server space," he said. "Enterprises are employing these technologies to increase the efficiency of their installed server systems, rather than deploying new systems."

In terms of unit shipments, the x86 server market grew 9.8 percent to 1.68 million systems, IDC said. Sun's shipments increased 48 percent and HP's rose 3.6 percent, while Dell and IBM x86 server shipments decreased.

Among other IDC findings:

• Blade server revenue grew 37.1 percent while shipments increased 29.7 percent. IBM and HP are virtually tied, IDC said; IBM had 39.5 percent of the market compared with 38.9 percent for HP.

• Linux server revenue grew 6.1 percent to $1.5 billion, 12 percent of the overall market. That's the first time in the last 15 quarters that growth was less than 10 percent.

• Unix server revenue shrank 1.6 percent to $4.3 billion, while Windows server revenue grew 3.1 percent to $4.2 billion.

• Itanium server revenue grew 36.4 percent to $740 million.

• Servers with AMD's Opteron chip accounted for 20.2 percent of x86 server revenue.

• Revenue from lower-end systems costing up to $25,000 grew 6.2 percent, but for systems between $25,000 and $500,000 it dropped 3.5 percent and for higher-end models it fell 6.9 percent.

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About the author

Stephen Shankland has been a reporter at CNET since 1998 and covers browsers, Web development, digital photography and new technology. In the past he has been CNET's beat reporter for Google, Yahoo, Linux, open-source software, servers and supercomputers. He has a soft spot in his heart for standards groups and I/O interfaces.

 

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