Fuelled by strong sales of Windows and Linux systems, the worldwide server market grew to $11.5bn (£6.38) during the second quarter of 2004, according to figures released by industry research company IDC.
Server shipment revenue was up 6.9% from last year's second quarter, and the total number of servers shipped jumped 21% during the same period, IDC said.
IBM retained is position as the top server supplier, when measured by revenue, with total sales increasing 11.7%, year on year, to $3.7bn. Strong sales in IBM's mainframe product line, which saw revenue grow 40.6% to $1.5bn during the same period, contributed to IBM's strong showing, IDC said.
Hewlett-Packard was in second place, with sales of $3.1bn during the quarter - a year on year increase of 4.6%.
When measured by units shipped, however, HP led the market during the quarter. The manufacturer shipped 465,000 servers during the period, an increase of 22% from the 378,000 units it shipped during the same quarter in 2003.
A highly publicised slowdown in server sales caused by glitches in HP's new ordering processing and supply chain system was not reflected in IDC's numbers, because HP's problems began after the second-quarter period, IDC said. IDC's figures cover the three months ending on 30 June, said IDC.
The order processing problems, which were blamed for an estimated loss of $400m of potential revenue, began over the 4 July weekend, according to HP. Those problems were reflected in results for HP's fiscal third quarter which ended on 31 July.
Linux continued to be the fastest growing server platform, with revenue growth of 48.9% and unit shipment growth of 38.2%, IDC reported.
The open source operating system's growth rate slowed somewhat from the first quarter of 2004, when revenue grew by 57% and unit shipments were up 46.6% year on year.
Windows systems revenue grew by 13.2% from second-quarter 2003 figures and totalled $3.6bn, IDC said.
Though Unix system shipments grew by a respectable 20.2% year on year, revenue from Unix systems was down by 3% during the period.
Sun Microsystems, the Unix market leader, with 33.6% of this $4.2bn market, continued its trend of posting strong unit shipment growth but weak revenue growth.
Though shipments of the company's servers grew at 33.8% - the fastest rate of the major suppliers - Sun's revenue was up only 0.2% from the previous year, totalling $1.44bn for the quarter.
Robert McMillan writes for IDG News Service
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