After a 2009 to forget, the server business is rebounding well, although some segments are doing better than others. According to market researcher International Data Corp. (IDC) , worldwide factory revenue for servers grew 11 percent year-over-year in the second quarter of this year to $10.9 billion and unit sales grew 23.8 percent.
The difference in revenue and unit sales is attributable to price pressure driving down the average sale price of servers, but after the double digit percentage losses in 2009, it's still welcomed news for server vendors.
The 23.8 percent year-over-year growth is also an improvement over Q1, when sales rose 23.0 percent year-over year and represents the fastest year-over-year quarterly server shipment growth in more than five years, according to IDC.
But the devil is in the details. Volume servers, which IDC defines as servers under $25,000, made up much of the growth, up 31.7 percent. Midrange servers – which run $25,000 to $250,000, grew 15.6 percent, while enterprise-class servers costing $250,000 and more fell 27.2 compared to last year. That's the seventh consecutive quarter of declining high-end server sales.
Part of this decline can be attributed to customers holding off on purchases of high-end servers because new hardware was on the horizon. IBM launched low- to mid-range Power 7-based servers in April and more powerful servers in August along with a new mainframe, the zEnterprise, in July. HP announced it would ship new Integrity servers, which run the Itanium processor, later this year, and the outlook for Sun hardware remains unclear, although Oracle has begun to lay out a roadmap for Sun hardware in recent weeks.
These big Unix systems and mainframes tend to be very expensive purchases and are not done very often or casually, so customers are more inclined to wait if there is something newer and better coming. For that and other reasons, worldwide non-x86 server sales declined 16.0 percent year-over-year to $3.9 billion in the second quarter.
"The server market is at a crossroads. This is the fourth consecutive quarter of improving server market demand and the fastest quarterly server revenue growth IDC has reported in more than 5 years," Matt Eastwood, group vice president of the enterprise platforms group at IDC said in a statement.
"IDC continues to see widespread infrastructure refresh occurring across all geographies. While much of this refresh is occurring first in x86-based servers, IDC expects the recovery to extend to Unix and mainframe platforms in the second half of 2010. That said, it is clear that a wave of migration is also occurring as customers broaden their deployment of x86-based servers to a wider range of workloads," said Eastwood.
x86-based servers continue to dominates the server market, growing 35.3 percent year-over-year to $7.0 billion. HP was the top vendor, with 35.3 percent of the market, followed by IBM at 29.8 percent revenue share, Dell was third with 15.3 percent, Oracle (Sun) was fourth with 8.6 percent and Fujitsu was fifth with 3.4 percent.
The blade server market continued to be the most popular of all server form factors, with revenue growing 40.3 percent year-over-year and unit shipments up 13.6 percent year-over-year. HP really dominates in this market, with 58.8 percent of the blade server revenue. IBM is a distant second with 22.6 percent.
Servers loaded with Microsoft Windows grew 28.2 percent in units and 6.7 percent in revenue, representing 46.5 percent of overall factory revenue in the quarter. Linux server revenue grew 30.1 percent. Linux servers now represent 16.8 percent of all server revenue.