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HP nails server sales in 2002

A post-merger Hewlett-Packard beats out Dell for the No. 1 spot in the worldwide server market, which managed a slight gain despite the economy.

John G. Spooner Staff Writer, CNET News.com
John Spooner
covers the PC market, chips and automotive technology.
John G. Spooner
3 min read
Hewlett-Packard was the top server seller in 2002, as the worldwide server market eked out a small gain in shipments.

A new report by research firm Gartner shows that worldwide server unit sales increased by just over 4 percent to 4.6 million during the year, up from 4.4 million units in 2001. The results indicate that although the server market is improving slightly, it is still hampered by a tepid economy, the firm said.

HP, which shipped the most units during the year, moved nearly 1.4 million machines, giving it 30 percent of the total market. Dell Computer took second place, turning out 851,000 machines, for about 19 percent of the market. Servers are heavy-duty computers built to process or store data on computer networks.

But while unit sales increased in most areas of the world, including Asia, the United States and Europe, revenue did not always show a corresponding increase, the Gartner report said, indicating that the market shifted toward less-expensive machines. Unit shipments in the United States rose by nearly 14 percent, increasing from 1.71 million units in 2001 to 1.95 million in last year.

Gartner recently predicted that revenue from less-expensive Intel servers will surpass revenue from high-end Unix-based servers for the first time in 2003.

"The performance of the worldwide server market continues the growth pattern which began in the first quarter of 2002, suggesting that server shipments for the worldwide market may be stabilizing, but not showing signs of dramatic growth due to continued economic pressure in a number of regions," Shahin Naftchi, server analyst for Gartner, said in a statement.

For HP, retaining the top spot in shipments was a case of controlling its post-merger customer losses. The company, which absorbed Compaq Computer in May, saw a 4.6 percent decline in combined sales during 2002. It also lost nearly 3 points of market share.

But Gartner said that HP, which is still well ahead of Dell in shipments, is doing a good job of converting customers from its Intel-based NetServers to Compaq's Intel-based ProLiant servers. HP chose to continue offering the ProLiant models and phase out similar NetServers after the merger.

"HP completed the customer transition from the NetServer to the ProLiant brand, and it appears that a percentage of the old NetServer customers have lost their inhibition to move to the ProLiant brand, which helped HP to retain that customer base," Jeffrey Hewitt, server analyst with Gartner, said in a statement.

HP also took back the top spot in worldwide PC market share in the fourth quarter of 2002.

But Dell likely benefited from some of HP's declines. The company increased shipments by just over 19 percent in 2002, good for a jump of more than 2 points in market share.

IBM's 658,000 units for the year equaled a decline of 1 percent from its 2001 total. The company, which garnered 14 percent of the market, lost nearly a point of market share, but ranked third in the world in 2002.

Sun Microsystems, which ranked fourth with 6 percent of the market, was the only brand name manufacturer aside from Dell to increase its shipments. The company boosted shipments by about 7 percent to 277,000 last year.

NEC took fifth place with nearly 104,000 units, a dip of 2.5 percent. It had 2.2 percent of the market in 2002. A combination of smaller vendors accounted for the remaining third of the market, or about 1.3 million units.