RealTime IT News

Server Sales Remain Brisk in Q1: IDC

Worldwide servers sales continue to grow in 2008, with international sales making up for U.S. softness while the once-looming threat of virtualization failed to dent server sales, according to IDC.

The company said that during the first quarter of 2008, worldwide server sales totaled $13.0 billion, a 3.5 percent gain from the first quarter of 2007. Unit sales topped two million, which, if annualized, means server unit sales will surpass last year's total of eight million servers sold.

That's a remarkable figure because many researchers last year, including IDC, had predicted that virtualization would diminish server sales. Instead, the opposite happened.

"Not all servers are shipped for virtualization," said Jean Bozman, research vice president in IDC's enterprise platforms group. "High-performance computing and Web workloads are not virtualized. Also, some people are buying new servers so they could virtualize eventually."

She added that the growth of the worldwide market means more machines are needed everywhere. "There are places around the world where people are building out that infrastructure, and those require new units going out," Bozman said.

Blade systems remain white-hot, growing 53.7 percent from Q1 2007, a fact that Bozman attributed to blades' considerable financial appeal.

"What we find now is there's such a focus on controlling operation costs that working in a blade form factor is really helping with maintaining costs, and people are pulling more workload into blades," she said.

Revenue from volume systems, those defined by IDC as priced under $25,000, grew 5.4 percent year over year in the first quarter. Mid-range systems -- between $25,000 and $500,000 -- grew 7.2 percent, while the high end grew 9.7 percent.

Like Gartner's recent report, IDC found HP to be the revenue winner, just edging out IBM with a 29 percent market share to Big Blue's 28.1 percent.

HP (NYSE: HPQ) finished the Q1 with quarterly revenues of $3.77 billion, up 4.2 percent over the same period last year.

Still, IBM (NYSE: IBM) enjoyed a solid quarter with $1.1 billion in z10 mainframe shipments, up 10.4 percent over first-quarter 2007 -- the highest first quarter revenue for IBM's System z systems in three years.

But HP won out thanks to momentum in its ProLiant, Integrity, and BladeSystem businesses.

"It does look like [HP division] Business Critical Systems had a good quarter," Bozman said. "That may have helped them here in terms of revenue."

Also as in Gartner's recent report, IDC found that Dell had the strongest growth during the quarter. IDC said the company's revenue grew 9.4 percent, the largest gain among vendors. Sun Microsystems (NASDAQ: JAVA) slipped 1.8 percent.

Microsoft also continued to show growth in Windows-based servers, with revenue from server sales totaling $5.1 billion in Q1 of 2008, a 4.2 percent year-over-year increase. Windows-based servers accounted for 39.2 percent of all server revenue during the quarter.

Linux servers also enjoyed strong sales, rising 8.4 percent over first quarter 2007 to $1.8 billion, accounting for 13.7 percent of all server revenue. Unix servers, meanwhile, dipped 0.8 percent to $4.0 billion in total spending, representing 30.6 percent of quarterly server revenues.

x86 server sales grew 4.4 percent since Q1 of last year, while the non-x86 server market -- essentially Sun, IBM and the Itanium business, dominated by HP -- grew 2.5 year over year.