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Sun retakes Unix sales lost to IBM

Big Blue is still No. 1 in overall U.S. server sales, but Sun's share of the Unix server market surged from the first quarter of 2001 to the first quarter of 2002, new research shows.

Sun Microsystems has reversed some of its losses to IBM in server market share in the United States, new research shows.

IBM is still No. 1 in the overall U.S. server market, but in the most lucrative section, Unix servers, Sun market share surged from the first quarter of 2001 to the first quarter of 2002, figures from research group Gartner show.

In the Unix market, No. 1 Sun gained 3.3 percent, rising from 50.7 percent last year to 54 percent this year. No. 3 IBM, meanwhile, lost 4.1 percent, sinking from 21.3 percent to 17.2 percent.

It's a key victory for Sun, which in the heady days of Internet mania had server competitors scrambling to catch up. But since then, has Sun lost some of its lead and much of its initiative to IBM, which has an aggressive product strategy and competitive prices.

Sun has largely completed a major overhaul of its server line but now is dealing with the departure of Chief Operating Officer Ed Zander and several other top executives.

Servers, more powerful and expensive than desktop computers, handle network tasks such as keeping track of purchases at Best Buy or the customer database of U-Haul. With many users simultaneously using their services, the systems often run 24 hours a day and require better resistance to crashes, hacker attacks and other computer ailments.

Sun gloats
Sun Chief Competitive Officer Shahin Khan said Sun felt "vindicated" by the numbers. Sun was stung when market analysis firm IDC said IBM was the top Unix server seller worldwide in the fourth quarter of 2001, an assessment Sun disputed.

"Given dot-com bubble bursting, tough compares (with earlier, more successful quarters), Sept. 11 and the product transition, we had a period of a few months when if anybody wanted to catch us, that was it," Khan said. "Once we went through the 15k launch and the 12k launch, (we showed) we're back with strength."

IBM preferred to take the longer-term view. "We are six quarters into a run of gaining share pretty broadly across the eServer line. We continue to build momentum with Intel-based servers, Linux and push our Power4 technology down the Unix product line," IBM said.

The Unix server market accounted for 40 percent of the $4.3 billion total server sales in the United States in the first quarter, Gartner said. While that's the biggest single segment, it's still suffering from the recession, with sales shrinking 5.3 percent from $1.8 billion to $1.7 billion, Gartner said.

No. 2 Unix server seller Hewlett-Packard gained almost as much as Sun, rising 3.2 percent, from 16.6 percent, to 19.8 percent. That gain, however, will be eroded in future quarters: No. 4 Compaq Computer, whose Unix servers will be phased out in the long term as a result of its merger with HP, dropped 1.8 percent, from 4.7 percent, to 2.9 percent.

IBM's silver lining
IBM can take some consolation from the overall market share figures as well as sales in two categories of lower-end machines, Linux servers and Intel servers.

In Intel servers, a $1.5 billion market in the first quarter, No. 3 IBM gained 2.6 percent, to 10.2 percent. No. 1 Dell Computer lost 2 percent, slipping to 27.5 percent of the market.

In Linux servers, IBM moved up to the No. 1 spot, gaining 19 percent to hold 34.4 percent of the $236 million market. While most parts of the server market shrank, Linux server sales grew 78.9 percent, Gartner said.

IBM maintained its No. 1 rank in the overall server market, increasing its share 1.3 percent, to 29.3 percent. Sun's success in Unix servers, though, meant it gained 2.2 percent, to 23.6 percent.