Server revenue declines as shipments rise in 2002

An increase in sales of Linux servers and a strong fourth quarter revenue growth will boost the server market, Dataquest has...

An increase in sales of Linux servers and a strong fourth quarter revenue growth will boost the server market, Dataquest has predicted.

IBM and Dell Computer saw its market share grow the full year. IBM took in $13.4bn (£8.5bn) from the sales of its servers in 2002, down slightly from its 2001 revenue of $13.6bn. IBM's revenue figures include sales of its lucrative iSeries servers, the old AS/400 and its zSeries mainframes.

The numbers for the top four companies, IBM, Hewlett-Packard, Sun Microsystems and Dell, include Unix servers as well as servers running Windows or Linux on Intel's processors.

HP was second in 2002 with $10.8bn in server sales in 2002, but posted a 13% decline in revenue and a 1.4% fall in its market share for the full year.

Overall revenue from Sun's servers fell 10% from $7.25bn in 2001 to $6.5bn (£4.1bn) in 2002. Dell was the only supplier to increase revenue for all of its servers year-on-year, coming in fourth overall with $3.2bn (£2bn) in revenue in 2002.

In the fourth quarter of 2002, all four suplpiers increased their revenue compared to the third quarter of 2002. Overall revenue from servers was down 8% from last year at $43bn (£27.3bn).

Unix servers from IBM, HP, and Sun are generally more expensive than their Intel-based counterparts, but Intel servers make up the majority of all systems out on the market. Revenue from Unix servers has declined as IT managers switch to lower-cost servers running Windows or Linux, with IT budget pressures and the comparable performance of networked Intel servers forcing companies to rethink their server strategy.

Server shipments rose by 4.2% in 2002, according to Dataquest. This signals increased sales of less expensive Intel servers, and falling prices among server suppliers as the industry tries to stimulate demand.

For 2002, revenue from Unix servers declined from $19.4bn in 2001 to $17.2bn (£11bn) in 2002. Revenue from Intel servers also fell 5%, but IBM and Dell were able to increase their revenue from Intel servers.

HP continues to take in the most revenue from Intel servers, selling $5.1bn (£3.2bn) worth of those servers in 2002, but it lost 3.2% in market share to IBM and Dell in 2002. Sun does not sell Intel-based servers, and remains the leader among the Unix suppliers despite a 10% decline in revenue.

Linux still has a way to go on the desktop, but the server suppliers are embracing Linux. Revenue from Linux servers increased 63% to $2bn (£1.3bn) in 2002, while IBM's revenue was $759m (£481m). Dell and HP increased their revenue from Linux servers, but lost market share to IBM.


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