IBM, Dell dominate flat Q3 server market

IDG News Service - IBM and Dell Computer Corp. dominated worldwide third-quarter server sales and were the only major vendors to gain market share compared with the same quarter last year, according to the most recent data from Gartner Inc.
Overall, server revenue slipped in the third quarter, even though the overall number of shipments rose. Server makers are locked in a fierce price war in both the high and low ends of the market, with many offering large discounts on systems well below their advertised prices, according to the vendors. A total of 1.14 million servers were shipped in the quarter, generating $10.5 billion in revenue, according to Gartner. That compares with 1.07 million servers sold in the third quarter last year for $10.9 billion.
Shahin Naftchi, a senior analyst at Stamford, Conn.-based Gartner, 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."
In addition, the U.S. was shaken by the Sept. 11 terrorist attacks in last year's third quarter. That caused an economic disruption in the U.S and abroad, so higher server shipments this quarter may not reflect a healthier market for the long term, Naftchi said.
IBM made one of its strongest showings in recent memory during the period, with gains in both its RISC- and Intel-based server businesses. Dell also performed well with its core Intel-based server line, while rivals Hewlett-Packard Co. and Sun Microsystems Inc. struggled with their server operations.
"IBM was the star of the quarter," said Naftchi, noting that IBM's pSeries Unix servers and xSeries Intel servers performed well.
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 a market-share gain, 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, according to Gartner.
IBM made its largest gains in the lucrative Unix server market, while HP and Sun lost share. IBM made 11% more revenue this quarter vs. last year and increased its market share by 3.8 points to hold 23.6%. Sun held onto its position as the Unix leader, with 33.7% of revenue, dropping 1.1 points in