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HP loses top slot to IBM in server market: IDC

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CIOL Bureau
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FRAMINGHAM, USA: HP lost its No 1 server vendor tag to IBM in the second quarter of 2011, despite the fact that server market revenue increased in 2Q11.

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As per International Data Corporation's (IDC) latest Worldwide Quarterly Server Tracker, HP, which held 32.2 per cent share in the server revenue market same period last year, dropped to 29.8 per cent in 2Q11, growing at just 9.3 per cent.

Also Read: HP launches scale-up servers for enterprises



Whereas, IBM, which held 28.9 per cent share in the server market in 2Q10, accounted for 30.5 per cent share in the same quarter this year, growing at 24.5 per cent.

Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, Second Quarter of 2011

(Revenues are in Millions)























Vendor

2Q11

2Q11 Market

2Q10

2Q10

2Q11/2Q10




Revenue

Share

Revenue

Market

Revenue
















Share

Growth
1. IBM

$4,008

30.5%

$3,219

28.9%

24.5%
1. HP

$3,922

29.8%

$3,589

32.2%

9.3%
3. Dell

$1,814

13.8%

$1,725

15.5%

5.1%
4. Oracle

$941

7.2%

$903

8.1%

4.2%
4. Fujitsu

$849

6.5%

$363

3.3%

133.6%
Others

$1,621

12.3%

$1,355

12.1%

19.7%
All Vendors

$13,156

100.0%

$11,154

100.0%

17.9%
IDC's Worldwide Quarterly Server Tracker, August 2011
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IBM experienced 24.5 per cent year-over-year growth in factory revenue gaining 1.6 points of share in the quarter on the performance of System x, Power Systems, and System z. HP's factory revenue grew 9.3 per cent year over year in 2Q11 based on solid demand for x86-based ProLiant servers and blades.

Dell maintained third place with 13.8 per cent factory revenue market share in 2Q11. Dell's factory revenue increased 5.1 per cent compared to 2Q10, driven in part by strong demand from SMB customers.

Oracle and Fujitsu together held the number four position with 7.2 per cent and 6.5 per cent factory revenue share, respectively, in 2Q11. Oracle's 2Q11 factory revenue increased 4.2 per cent compared to 2Q10, driven in part by improved demand for x86-based Exadata systems.

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As a direct result of the large scale K-computer HPC system in Japan, Fujitsu experienced a sizable 133.6 per cent year-over-year improvement in server revenue.

IDC in its report finds that global server market revenue increased 17.9 per cent year-over-year to $13.2 billion in the second quarter of 2011 (2Q11). This is the sixth consecutive quarter of year-over-year revenue growth, as server market demand continued to improve around the world, finds International Data Corporation (IDC) in its latest Worldwide Quarterly Server Tracker.

Server unit shipments increased 8.5 per cent year-over-year in 2Q11 to 2.1 million units, which is the second highest quarterly total ever reported in the second calendar quarter of any year, it adds.

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Improved market conditions were seen across all three server classes - volume, midrange enterprise, and high-end enterprise. Volume systems experienced a 16.6 per cent year-over-year revenue increase, the seventh consecutive quarter of positive growth for the segment.

Midrange enterprise demand improved for the fourth time in the past five quarters, with a 16.7 per cent year-over-year revenue increase. Finally, the improving market conditions extended to the high-end enterprise segment, as quarterly revenue increased 22.8 per cent when compared to 2Q10.

This is the second consecutive quarter that all three segments of the server market have experienced a year-over-year revenue increase in the same quarter.

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"Server market growth accelerated in 2Q11 and experienced its highest reported second quarter revenue in three years with all geographies contributing to the positive year-over-year growth. This was the fifth consecutive quarter with double-digit year-over-year revenue growth as the market recovery continued to extend from x86 servers to midrange Unix to high-end mainframe class systems," said Matt Eastwood, group vice president, Enterprise Platforms, IDC.

"While 2Q11 was an exceptionally strong quarter, attention has already turned to the market outlook for the second half of the year. IDC believes that weakening macroeconomic conditions around the world will serve to moderate demand for new servers later this year."

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Top Server Market Findings

The market for non-x86 servers, including servers based on RISC, EPIC (Itanium-based), and CISC processors, increased 23.3 per cent year over year to $4.8 billion in 2Q11. This is the third consecutive quarter in which non-x86 servers have exhibited positive growth and the second consecutive quarter that non-x86 based system revenue has grown faster than the market overall.

Growth in non-x86 server revenue was driven by improved demand for Unix servers and IBM System z platforms.

Unix servers experienced a second consecutive quarter showing year-on-year factory revenue improvement, growing 1.5 per cent when compared to 2Q10. Unix server revenues were $2.9 billion, representing 22 per cent of quarterly server revenue in the quarter.

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IBM's Unix server revenue increased 14 per cent year-over-year in the quarter, as IBM gained 6.0 points of Unix server market share.

IBM's System z servers experienced the fourth consecutive quarter of positive revenue growth, with 61.1 per cent year-over-year growth in 2Q11 to $1.2 billion, representing nine per cent of quarterly server revenue worldwide.

This was the fourth consecutive quarter that IBM System z revenue exceeded $1 billion, driven by new product introductions and demand for capacity within the IBM installed base.

Linux server demand increased for the seventh consecutive quarter in 2Q11, with revenue growing 47.5 per cent to $2.7 billion when compared with the second quarter of 2010.

Linux servers represent 20.5 per cent of all server revenue in the quarter as Linux server demand was helped significantly by Fujitsu's large scale K-computer HPC system in Japan.

Microsoft Windows server demand also continued to show strong growth as Windows-based hardware revenue increased 12.4 per cent year-over-year.

Quarterly revenue of $5.9 billion for Windows servers represented 45.5 per cent of overall quarterly factory revenue and 71 per cent of all quarterly server shipments.

"The Unix server marketplace is seeing some rebound in revenue, based on technology refresh for Unix server products from all major vendors," said Jean S. Bozman, research vice president, Enterprise Servers, IDC. "This segment was hard-hit in 2009 and 2010 during the economic downturn as customers deferred or delayed acquisition of midrange and high-end Unix servers."

"Now, many mission-critical workloads need more room for workload consolidation, and user demand for long-deployed applications and databases is growing. This move to expand capacity in the installed base is combined with net-new demand from customers who are building out new infrastructure, such as in Asia/Pacific, Middle East and Africa (MEA), and Latin America," adds Bozman.

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Bladed Server Market Results

The blade market continued its solid growth in the quarter with factory revenue increasing 26.9 per cent year-over-year and shipment growth increasing by 6.2 per cent compared to 2Q10. Overall, bladed servers, including x86, EPIC, and RISC blades, accounted for $2.0 billion in revenues, representing 15.2 per cent of quarterly server market revenue.

Nearly 89 per cent of all blade revenue is driven by x86-based blades, which now represent 21.2 per cent of all x86 server revenue. HP maintained the number 1 spot in the server blade market in 2Q11 with 51.9 per cent revenue share, while IBM finished with 19.1 per cent revenue share.

Cisco and Dell rounded out the top four with 10 per cent and 8.2 per cent factory revenue share, respectively.

"Blade revenue growth accelerated in the second quarter and remained the fastest growing form factor. All major vendors experienced double-digit growth in their blade business," said Jed Scaramella, research manager, Enterprise Servers, IDC. "In terms of the x86 market, the blade segment performed particularly well, accounting for 21.2 per cent of x86 revenue - the highest proportion since their introduction into the market."

"Blades continue to be a strategic element in vendor portfolios commanding a higher average sales value and providing an opportunity for pull-through revenue," Scaramella adds.

x86 Industry Standard Server Market Dynamics

Demand for x86 servers continued to improve in 2Q11, with revenues growing 15.1 per cent in the quarter to $8.4 billion worldwide as unit shipments increased 5.4 per cent to 1.9 million servers.

HP led the market with 38.1 per cent revenue share based on 14.4 per cent growth over 2Q10. Dell retained second place, securing 21.7 per cent revenue share, while IBM now holds 16.1 per cent revenue share.

Overall, this was the ninth consecutive quarter with year-over-year increases in average selling prices (ASPs) for x86 servers. This is occurring as both the mix of systems and average system configurations continue to move up-market, driving generally higher product margin for x86 ecosystem players.

Moreover, this was the seventh consecutive quarter of year-over-year factory revenue growth for x86 servers.

"x86 servers continue to drive the majority of the server market, and x86 revenues are consistently outperforming unit growth on a quarterly basis," said Reuben Miller, senior analyst in IDC's Enterprise Servers group. "This market trend will continue as customers look at consolidating more workloads onto servers that are configured with increased memory attach rates and higher priced processors to provide systems capable of improving performance and efficiency."

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