Sun comes on strong in server sales

When IDC collects sales data for the server market, there are tidbits of good news for all the major companies. But in 2000, Sun Microsystems came out with more tidbits than the rest.

Stephen Shankland Former Principal Writer
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Stephen Shankland
3 min read
When IDC collects sales data for the server market, there are tidbits of good news for all the major companies. But in 2000, Sun Microsystems came out with more tidbits than the rest.

There are plenty of charitable interpretations of the data, included in a newly compiled report obtained by CNET News.com: IBM handily kept its position at the top of the heap. Compaq had strong sales of low-end servers. Hewlett-Packard nearly doubled high-end Unix server revenue. And Dell's low-end server revenue grew at 37 percent, far faster than the market overall.

Sun, though, had victories in many different segments of the market. The Palo Alto, Calif., company's strong position in the Unix server market meant its total server revenue grew 42 percent, from $7.3 billion in 1999 to $10.3 billion in 2000. It passed both Compaq's $10 billion and HP's $9 billion to take second place after IBM, with $13.6 billion in revenue for the year.

In other Sun victories: Its $4.3 billion in sales of low-end servers--those costing less than $100,000--lifted it over IBM and HP to second place after Compaq. And in high-end systems--costing $1 million or more--Sun increased revenue 84 percent to $2.1 billion, while market leader IBM declined 7 percent to $4.3 billion.

Companies are fighting ever more aggressively to conquer the market for servers--machines costing anywhere from a thousand to several million dollars that handle jobs such as tracking General Motors' inventory or delivering Amazon.com's Web pages to browsers. The market grew 7 percent, from $56 billion to $60 billion, IDC said in its report.

Even though the dot-com party is over, companies still are pushing ahead with plans to fold the Internet into their operations and increase computerization in general. And with the PC market essentially dormant, computer makers are looking to servers to revive flagging revenue.

IDC's figures are somewhat different than a similar study by Dataquest. Both studies concur that IBM is tops, however, and that Sun has fought past HP and Compaq.

HP, however, didn't fare so well. HP's lost its top rank in midrange servers to IBM, even factoring out the $221 million revenue Big Blue picked up from its acquisition of Sequent. HP's share of the $29 billion Unix server market stayed flat at 23 percent, while IBM grew from 17 percent to 19 percent and Sun grew from 28 percent to 35 percent.

And where Compaq, Dell and IBM outpaced the 31 percent growth of the $13.9 billion Windows server market, HP grew only at 18 percent.

Meanwhile, despite strong revenue growth, Dell remains in fifth place overall and even in its sweet spot, low-end servers.

The IDC study also showed which server segments are most promising. The mainframe market, dominated by IBM, shrank 18 percent to $3.9 billion. The Unix market grew 14 percent to $29 billion, while the Windows market grew 31 percent to $13.9 billion.

The Linux server market grew 132 percent to $1.7 billion. Compaq led this market with 31 percent market share, followed by Dell and IBM with 14 percent each, VA Linux Systems with 9 percent and HP with 7 percent.

The U.S. server market overall grew 8 percent, slightly faster than the worldwide market's 7 percent rate, to $22.9 billion. Western Europe grew 3 percent to $15.5 billion. Japan grew faster, up 17 percent to $9 billion, while the rest of the Asia-Pacific region grew 19 percent to $5.2 billion, IDC said.