IBM, HP extends in lead in server market, Dell returns to growth

Stamford (CN) - Worldwide server shipments grew 6% in the first quarter of this year, with revenues inching up 4.5%. IBM increased its revenue share, while HP is leading the pack in shipment numbers. And Dell is beginning to see some light at the end of the tunnel, with server sales and double-digit growth.

Global server revenues totaled $12.9 billion for the quarter, as worldwide servers shipments reached just over 2.1 million units, according to a report released by Gartner.

x86 servers, which have become the main driver for the server segment, returned to growth in the first quarter, following a slight decline in Q4 2006. "x86 servers had been constrained in the fourth quarter of 2006 due to the lengthening sales cycles, following a period of particularly rapid technology transition," said Jeffrey Hewitt, an analyst at Gartner. He argued that "this constraint was less about virtualization and was only a temporary issue as evidenced by the fact that this part of the market returned to growth in the first quarter." The higher end RISC-Itanium Unix segment suffered another quarter of heavy losses with shipments falling 15.5% and revenues declining 1.5%. "The competition remains intense in this portion of the market as it continues to face declines." Hewitt said.

IBM continued to lead the worldwide server market based on revenue, reaching $3.8 billion in Q1 2007. According to Gartner, the company saw increases for the quarter in System p/p Series, System x/x Series and System z/z Series while it experienced declines only in System i/i Series which combined to produce an overall revenue increase of 8.4 percent for the quarter and boosted IBM’s revenue share by 1.1 percentage points. In terms of shipments, IBM declined 1.1 percent for the quarter and it lost 1 point of shipment share on a worldwide basis. In server shipments, HP saw substantial shipment gain with an increase of 3 percentage points to 30.0%, a level the company has not seen since 2002. The share gap between HP and second place Dell increased by 3.6 points for the quarter to now 8.9 points. Much of HP’s share gain is attributed to a strong growth in the traditional "sweet spot" of 1 and 2-socket x86 servers, Gartner said. Dell is still having problems to bring its business back on track, but the company was able to grow its shipment numbers by 3.3% year-over-year, while the firm’s revenue jumped 10.3%. Sun posted a 10.1% shipment decline and lost 0.7% points in shipment share as a result. Server revenues increased by 2.2%.