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IBM rises, Sun sinks in server market

Big Blue widens its lead in the worldwide server market at the expense of Sun, making particular gains in Unix servers, according to research firm Gartner.

IBM widened its lead in the worldwide server market in 2003 at the expense of Sun Microsystems, making particular gains in the Unix server market, new figures show.

Server revenue for IBM grew 10 percent to $14.8 billion from 2002 to 2003, outpacing the overall market's 5 percent growth, market research firm Gartner said Wednesday. IBM increased its share 1.7 percentage points to 32 percent of the $46.1 billion total market.

In contrast, No. 3 server seller Sun saw its revenue decline 15 percent to $5.4 billion and its share drop 2.8 percentage points to 11.8 percent. No. 2 seller Hewlett-Packard grew 5 percent to $12.5 billion.

Fourth-place Dell posted the fastest growth, 22 percent, to $4 billion, narrowing Sun's lead from 7.2 percentage points in 2002 to 3.2 percentage points in 2003, Gartner said.

The server market is in major flux. Sun ascended faster than competitors, when the server market exploded in the late 1990s, then lost business faster, as the Internet mania evaporated, server buyers grew conservative and the economy went into recession.

IBM largely missed the growth spurt but recognized its error and began aggressive development around servers using the Linux operating system, Intel's Xeon processor and its own Power processor. The latter chiefly run the company's own version of Unix, called AIX.

In Unix servers, No. 3 IBM saw revenue grow 13 percent to $4.1 billion. Revenue for first-place Sun shrank 16 percent to $5.4 billion, while No. 2 HP saw revenue shrink 4 percent to $5.3 billion.

The overall Unix server market shrank 4 percent to $16.7 billion, while the Linux server market grew 90 percent to $2.8 billion, Gartner said.

HP was the top seller of Linux servers, Gartner found, with sales that increased 60 percent to $927 million. IBM passed Dell for second place, with Big Blue rising 60 percent to $552 million and Dell rising 40 percent to $521 million.

For years, the server market has been consolidating, giving the top companies an ever-larger share. In the overall market, the top four players garnered 80 percent of the revenue in 2003, compared with 79 percent in 2002.

That trend was reversed in the Linux market, though, where the top three companies went from 76 percent of the market to 72 percent.

The market for servers using Intel processors and Intel-compatible processors--Intel's Xeon and Itanium and Advanced Micro Devices' Opteron, for example--grew 18 percent to $20.3 billion, Gartner said.

Here, HP maintained its No. 1 rank with $6.8 billion in sales. Its market share dropped 0.4 percentage points to 34 percent, however.

In Intel servers, No. 2 Dell grew 22 percent to $4 billion, with its market share increasing 0.7 percentage points to 20 percent. IBM's revenue increased 21 percent to $3.4 billion, or 17 percent of the market.