Tech Industry

Dismal server market bruises IBM least

The server market plunged 30 percent in the third quarter of 2001, with IBM the least damaged and HP edging to within a fraction of Sun's lead in the key Unix server segment.

The server market plunged 30 percent in the third quarter of 2001, with IBM the least damaged and Hewlett-Packard edging to within a fraction of Sun's lead in the key Unix server segment.

The total server market dropped from $15.2 billion in the third quarter of 2000 to $10.7 billion in the third quarter of 2001, research firm IDC said in a report Friday.

In the overall market, IBM sales dropped 6.1 percent to $2.8 billion, but its market share rose 6.5 percent. Much of that gain took place at the expense of rival Sun Microsystems, which lost 6.3 percent of market share and saw revenue plunge 53 percent to $1.3 billion, according to IDC.

Servers are the powerful computers that handle chores on corporate networks such as keeping track of all the sales of airplane tickets. The systems are expensive, with top-end models often costing well over $1 million, and sales of servers tends to tow along sales of a company's other products and services.

Sun, which specializes in the Unix servers that make up the largest part of the overall market, had been ascendant in 2000, but lumbering IBM mustered a response and now is carving back sales from Sun.

Meanwhile, HP, once the top Unix server seller, is fighting back as well, and IDC said the company is within a hair's breadth of reclaiming the lead.


Gartner analyst Jeffrey Hewitt says the recent economic downturn has left IT budgets severely constrained and IT purchasers highly risk-averse.

see commentary

In the Unix market, Sun had 28.8 percent of the market in the third quarter, with sales of $1.33 billion. HP had 28.5 percent with sales of $1.31 billion, IDC said. IBM, in third place, had $960 million in sales for 20.9 percent of the market.

In the overall market, Compaq Computer was in second place with 16.3 percent of the market and a revenue drop of 34.7 percent to $1.75 billion. HP was in third place with 15.2 percent and revenue that dropped 29.7 percent to $1.64 billion. Dell, in fifth place with 7.9 percent of the market, had a revenue drop of 5.8 percent--the smallest of the top companies--with revenue of $847 million.