Sun gets boost from new server share report

Sun gets boost from new server share report

Sun improves server market share in second quarter but IBM and HP still lead.

Sun Microsystems has rebounded in the server market, according to new numbers for the second quarter of this year released Tuesday.

Sun grew server revenue by 15.5 percent to US$1.6 billion in the second quarter, from US$1.4 billion in the second quarter of 2005, according to IDC's Worldwide Quarterly Server Tracker. Its market share grew to 12.9 percent from 11.2 percent in the year ago quarter. The growth helps Sun reclaim third place on the market share ranking of the top server vendors, pushing rival Dell back to fourth. Sun ranked fourth, and Dell third, in the previous three quarters.

Sun was also the only major vendor to report second quarter revenue growth, while others reported declines.

"Sun was the big winner," said Jed Scaramella, an enterprise server research analyst at IDC, who attributed Sun's improvement to the strength of its UltraSPARC processor servers and earlier adoption than rivals of 64-bit Opteron chips from Advanced Micro Devices.

Still, Sun's server revenues were less than half of either of its main rivals.

IBM maintained its lead at 31 percent on revenue of US$3.8 billion, down 2.2 percent from a year earlier. Hewlett-Packard ranked second with a 27.8 percent share, on sales of US$3.4 billion, down 1.7 percent. Dell's share was 10.3 percent on a 1.3 percent decline in revenue to US$1.27 billion. Fujitsu Systems ranked fifth with a 4.5 percent share on a slight 0.5 percent revenue gain to US$554 million.

The report also shows sales only grew at the lower end of the market. Sales revenue for volume servers (those selling for less than US$25,000) grew by 6.2 percent year over year, while sales of midrange servers (US$25,000-US$499,000) fell by 3.5 percent and high-end (US$500,000 and up) fell by 6.9 percent. IDC attributes the shift to the improved technology in volume servers that offers improvements in performance, system management and other capabilities at an affordable price.

IBM remains the server leader by being "all about the total solution," said Scaramella. "They're all about global solutions rather than just selling the components. That's resonating."

The report also noted unit shipment growth of a modest 8.3 percent in the second quarter year over year, the eighth consecutive month of slow growth after double digit growth rates in 2004 and 2005.

Revenue growth was strongest in the U.S. market (3.6 percent) and Asia/Pacific excluding Japan (2.6 percent) while weaker elsewhere.

Revenue growth for x86-powered servers continued, but at a modest 3.3 percent to US$5.9 billion, on unit sales growth of 9.8 percent to 1.68 million. The x86 server continues to grow as customers "migrate server workloads to industry-standard architectures," said Scaramella.

The blade server market showed strength with 37.1 percent revenue growth on a 29.7 percent jump in unit sales.

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