Worldwide sales of server hardware reached $11.5bn in the first quarter of 2004, according to IDC.
The figures show a 7.3% growth over the same period last year, and marks the fourth consecutive quarter of overall growth in the server market.
Unit shipments of servers grew 22.4% over the same period, reflecting generally cheaper prices for server hardware.
The upswing reflects the general increase in IT spending, with organisations beginning to rebuild their computing infrastructure after nearly three years of slowed spending during the economic downturn.
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Linux server sales grew by 56.9% in dollar terms and 46.4% in unit shipment terms, the seventh consecutive quarter of double-digit revenue growth.
Windows-based servers also showed strong growth with revenue up 16.4% and unit shipments up 26.5%.
Sales of proprietary Unix-based servers fell 3% overall, but showed growth in Japan and the rest of the Asia-Pacific region, where users are building Unix-based computing and telecommunications infrastructure.
A small but rapidly growing market segment is for servers running 64-bit Intel-compatible processors.
Sales of x86-64 servers grew 35.1% over the previous quarter, with suppliers showing strong interest in Advanced Micro Devices' Opteron processor.
Sales of IBM's mainframe server products grew rapidly in the first quarter, which helped IBM hold on to its overall lead in the server market.
IBM holds a 29.7% share of the worldwide server market ahead of Hewlett-Packard, which has 26.9%.