Overall, server revenue slipped in the third quarter even though the number of shipments rose. Sever makers are locked in a fierce price war in the high end and low end of the markets with many offering large discounts on systems well below their advertised prices.
A total of 1.14 million servers were shipped in the quarter, generating $10.5bn (£6.6bn) in revenue, according to Gartner, compared with 1.07 million servers at $10.9bn for the same quarter last year.
Gartner senior analyst Shahin Naftchi noted that a number of factors contributed to the rise in shipments and drop in revenue.
"This trend happened because of a couple reasons," Naftchi said. "The first is the economic situation led to more customers buying low-end servers, and the second was price competition. Products that used to be in the midrange dropped into the low end because of the price cuts."
IBM made one of its strongest showings in recent memory during the period with gains in both its RISC (reduced instruction set computing)-based server and Intel-based server businesses. Dell also performed well with its core Intel-based server line while rivals Hewlett-Packard and Sun Microsystems struggled with their server operations.
In the third quarter, IBM grabbed 32% of the overall server revenue up from 30% in the same quarter a year ago. Dell also managed market share gains upping its take of server revenue to 7.7$ compared with 6.5% a year earlier. HP shed 2.2 points of revenue market share down to 24.5%, and Sun dropped 0.9 points to hold 12.6% of the market, said Gartner.
IBM made its largest gains in the Unix server market, while HP and Sun lost share IBM made 11% more revenue this quarter against last year's and increased its market share by 3.8 points to hold 23.6%.
Sun held on to its position as the Unix leader with 33.7%of revenue. HP finished with 31.1% of the market.
Sun did well with its low end and high end servers but suffered heavy losses in the midrange of the market, Naftchi said.
IBM also gained share in the lower priced Intel server market. The company captured 19.1% of the market in revenue up from 15.4% a year ago. Dell also gained share, grabbing 19.6% of the market up from 17.1%. HP remained the overall leader, cornering 29.4% of the market.
HP led all vendors with 337,084 servers shipped during the quarter. Dell moved 214,847, IBM shipped 161,190 and Sun shipped 61,457.
IBM, however, led in revenue with $3.4bn, with HP following with $2.6bn. Sun sold $1.3bn, and Dell rounded out the top four vendors with $814m.
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The worldwide server market is beginning to show signs of stabilisation despite continuing to book year-on-year declines in both shipments and revenues.