IBM, Dell win in losing server market

The two companies wrestled market share away from Hewlett-Packard and Sun Microsystems in 2002, a grim year in which overall sales dropped 8 percent to $43 billion, a new study says.

Stephen Shankland principal writer
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Stephen Shankland
3 min read
IBM and Dell Computer wrestled market share away from Hewlett-Packard and Sun Microsystems in 2002, a grim year in which overall sales dropped 8 percent to $43 billion, a new study said.

IBM maintained its top ranking in the market, with a 2 percent decrease in revenue to $13.4 billion but a 2.1 percentage-point gain in market share from 2001 to 2002, according to new figures Gartner released late Friday. Big Blue, which holds 31.1 percent of the overall market, made gains in Unix servers, Intel servers and Linux servers.

The server market, which had been growing by leaps and bounds during the Internet buying spree in the late 1990s, has been struggling with an economic recession and deep pricing discounts. However, server sales in the United States grew during the fourth quarter, Gartner said earlier this month, shortly after predicting 2003 sales would increase slightly.

Dell, in fourth place in the overall market, was the only competitor in the top four whose sales increased from 2001 to 2002. Its revenue grew 6 percent from $3 billion to $3.2 billion, while its market share grew 1 percentage point to 7.5 percent.

No. 2 HP saw its revenue decrease 13 percent to $11 billion and its market share drop 1.4 percentage points to 25.2 percent. No. 3 Sun's revenue dropped 10 percent to $6.5 billion, and its market share dropped 0.3 percentage points to 15.1 percent.

Sun still rules Unix roost
Sun still tops the Unix market, the largest single section of the server business. The company had sales of $6.5 billion for the year and a 38 percent market share.

HP maintained its No. 2 spot in the Unix market, with a 30 percent share and $5.2 billion in sales.

No. 3 IBM, though, suffered less than competitors. Its revenue dropped 7 percent to $3.6 billion, but its market share increased 1.1 percentage points to 21 percent, a bigger increase than Sun's 0.5 and HP's 0.3 percentage points.

However, the Unix market shrank 11 percent to $17 billion in 2002, a faster decline than in the overall market.

Intel and Linux rising
Sales of Linux servers increased 63 percent from 2001 to 2002, from $1.3 billion to $2 billion, Gartner said. The move mirrors a more dramatic 90 percent growth in the United States in the fourth quarter.

IBM leads the Linux market with $759 million in revenue--more than twice its 2001 sales--and 37 percent market share. HP, in second place, had $507 million in revenue, while third-place Dell had $365 million. Dell, though, lost 5 percentage points of market share while IBM gained 8.3 percentage points.

For servers using Intel processors or compatible models from companies such as AMD, the market shrank 5 percent to $16.4 billion. Now trailing the Unix server market by less than $1 billion, the 2002 statistics hint that Gartner could be correct in its forecast that Intel servers will generate more revenue than Unix servers in 2003.

In Intel servers, HP continues to lead with $5.1 billion in sales and 31 percent market share. But HP, which ascended to Intel-server leadership through its acquisition of Compaq Computer in 2002, lost 3.2 percentage points of market share between 2002 and 2001.

No. 2 Dell gained 1.9 percentage points to reach a 19.6 percent share in the market with sales of $3.2 billion. No. 3 IBM grew the fastest, with sales growing 16 percent to $2.8 billion and a 3.1 percentage-point gain boosting its market share to 17.3 percent.