Server market shrinks in Q3

The battle over control of the server market may be at the center of the

merger between HP and Compaq. The server market itself has been struggling,

suffering a 23.4 per cent drop in global sales in the third quarter compared to

a year ago. IBM, meanwhile, has widened its lead on Sun, HP and other

competitors, according to researchers at Dataquest. The decline of server sales

can be traced to the demise of the server-consuming Internet industry. The slump

in Internet business has also stopped corporate technology buying in its tracks.

Worldwide server sales fell to $10.8 billion, from $14.1 billion a year ago

and 6.5 per cent from $11.6 billion in the second quarter. US sales dropped 29.4

per cent from the previous year and 9.0 per cent from the previous quarter, to

$3.9 billion in the third quarter.

Unix-based servers, such as those from Sun and HP declined faster than the

overall market, while lower-end Intel-based systems running Windows 2000 or

Linux fell only 3.1 per cent to $4.0 billion. Unix severs revenues, by

comparison, dropped 15.5 per cent to $4.6 billion.

IBM increased its lead with $3.3 billion in server sales were more than twice

its three closest competitors, Compaq, Sun, and Hewlett-Packard, which each had

$1.4 billion to $1.5 billion in sales.

IBM now has a 30.3 per cent market share was up 7.0 per cent from a year ago.

HP's share held steady at 13.1 per cent, while Sun's fell 3.6 per cent, to 13.7

per cent share; and Compaq was down 1.9 per cent to 13.8 per cent.