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Low prices, Windows capture server market

Servers selling for less than $25,000 continue to drive global server market. And Windows leads server OS pack for first time.

Microsoft Windows captured the lead for the first time in server operating systems during the third quarter, boosted by continued demand for inexpensive servers selling for less than $25,000, according to a new report.

Inexpensive, or volume, servers continued to drive the worldwide server market in the third quarter, which grew 8.1 percent in the past year, to $12.5 billion, IDC said in a global server market report released Wednesday. The quarter was marked by the continued shift to inexpensive servers, which are often clustered together for greater horsepower and flexibility, at the expense of the pricier enterprise servers, which posted a decline in third-quarter revenues, IDC said.

Sales of volume servers costing less than $25,000 grew nearly 15 percent since last year. And midrange servers, for the fourth consecutive quarter, took market share away from enterprise servers by climbing nearly 4 percent. Enterprise servers, which sell for more than $500,000, declined 1.2 percent.

Sales of servers running Windows jumped nearly 18 percent, to $4.6 billion in the quarter. For the first time, Microsoft can say it makes the most popular server operating system, according to the report. IDC attributed Windows' adoption growth to customers increasingly deploying the operating system "in support of scalable work loads and consolidation projects."

And while revenues from Linux server sales rose a substantial 34 percent in the quarter, that was less than the growth rate in that category during the previous quarter, according to IDC. Unix revenues, which accounted for nearly 32 percent of the overall server market, fell roughly half a percent in the quarter, to $3.9 billion.

Among the hardware vendors, IBM retained its lead, with 32 percent of the server market, based on revenues. Hewlett-Packard accounted for nearly 28 percent of the market, followed by Dell with 10.5 percent and Sun Microsystems with 8.7 percent. Sun, which has struggled to regain its position as a significant player in the server market, fell to the No. 4 spot in the quarter after going head-to-head with Dell for several quarters for the No. 3 ranking.