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IBM tops slow server quarter

Despite a contraction in the overall industry, the company gains market share to become the leading server seller in the United States.

Despite a contraction in the overall industry, IBM significantly increased its share of the server market in the United States to become the top seller in the second quarter.

According to a preliminary report released Wednesday by researcher Gartner/Dataquest, IBM took the top spot in the United States based on market share and revenue. IBM's share increased to 28.6 percent from 19.1 percent a year ago, while second-quarter revenue climbed 8.4 percent from the second quarter of 2000.

Meanwhile, the overall U.S. server market shrunk by 27.4 percent in terms of revenues and 8.7 percent in units shipped.

As a result, Sun Microsystems, Compaq Computer and Dell Computer each lost ground. No. 2 Sun fell from 22.4 percent market share in the second quarter of 2000 to 20.7 in the second quarter of 2001. Compaq came in third, falling from 18 percent to 13.8 percent. Dell and Hewlett-Packard tied for fourth place in market share with 10.5 percent, a slight dip for Dell from last year's 11.3 percent and a slight gain for HP from the previous year's 10 percent.

"IBM was one of the few, if we count revenues, of the top five vendors to actually have some gains," said Dataquest analyst Jeff Hewitt. "It's a slight gain, but the overall market declined."

IBM attributed its gains to its relatively new server strategy, which combines its eServer hardware with alliances between IBM and service providers, such as Siebel Systems.

"We think that has contributed a lot, along with technology leadership we've trumpeted over the last 18 months," said Tim Dougherty, director of e-business strategy in IBM's eServer Group.

It wasn't always that way, though. After several years of lackluster sales performance, IBM rebooted its server line in October 2000. The company's four redesigned server lines were then relaunched under the new eServer brand as part of an effort to boost sales and become more competitive with rival Sun.

At the time, analysts called the move a gamble. But so far, the new strategy appears to have paid off.

"We've seen IBM, particularly, be more aggressive and more focused," Hewitt said. "IBM is more diversified, whereas Sun was tied in to the dot-coms and the telcos. We know that those sectors have had their share of problems. That's probably one of the reasons we've seen Sun lose some ground.

"The question remains as the economy picks up: Will (IBM) be able to spring forward, or will the other guys...be able to pick up?"

IBM also introduced a new family of servers, the xSeries, on Wednesday. xSeries machines will be based on Intel's Xeon and Itanium processors.