In Gartner's assessment of the server market in the fourth quarter of 2009, X64 servers and blades in particular were singled out as the growth engines. With IDC's similar, but different, report Thursday we learn that the Windows platform was the real beneficiary of the bump in sales.
IDC tracks factory revenues by the server manufacturers, while Gartner tracks revenues that add vendor and reseller sales together. So their numbers are never quite the same. But they are similar, and they track. Gartner talks about sales by X64, RISC, and Itanium processors, while IDC looks at server sales by the primary operating system deployed on the boxes.
IDC also gives a breakdown of sales by server price band (volume, midrange, and enterprise), and talks a bit about the X64 market and blades. By using both sets of publicly available data, you get the best sense of what is going on with servers short of paying Gartner and IDC the big bucks the vendor community does.
With IDC's way of looking at the server world, server revenues worldwide (as reckoned in US dollars regardless of where they were sold) were down 3.9 per cent to just under $13bn in the final quarter of 2009.
IDC reckons that 1.9 million units shipped out of vendor factories (this is not the same thing as the number of servers sold to customers since there is some inventory in the channel), an increase of 1.9 per cent compared to Q4 2008. For the full year, IDC believes worldwide server shipments were off 18.6 per cent, to 6.6 million units, and aggregate revenues mirrored this, with an 18.9 per cent decline to $43.2bn in sales.
As El Reg reported yesterday, Gartner calculates that 2.23 million boxes were sold in the fourth quarter of 2009, actually an increase of 4.5 per cent from a pretty awful Q4 2008, and that revenues nonetheless fell by 3.2 per cent to $12.6bn.
For the year, Gartner says server shipments dropped by 16.6 per cent, to 7.56 million units, and revenues fell faster, down 18.3 per cent to $43.1bn. Presumably the extra 960,000 servers that Gartner says were sold compared to IDC were machines that were stuck in the channel from late 2008 when the economic meltdown began.
"Market conditions improved significantly in the fourth quarter as the marketplace transitioned from recent stability to growth in several critical server segments," said Matt Eastwood, group vice president of IDC's enterprise server group, said in a statement accompanying the figures."
"Customers are actively re-evaluating their IT needs and refreshing their infrastructures, and the fourth quarter represents the beginning of a market inflection. While many customers sat on the sidelines during 2009, significant innovation continued as server vendors prepared for an expanding market opportunity in 2010 and beyond.
He continued: "Optimal conditions for market inflection occur only once a decade and IDC believes that market shares could shift dramatically as the winners and losers of this new market cycle are determined, with those who are best positioned to meet increasingly sophisticated IT needs across the market gaining share."
So it looks like Oracle and Cisco Systems are hopping into the server racket at just about the right time, eh?
Volume play pays
The volume server segment, which encompasses machines that cost under $25,000, had a 9.9 per cent revenue bounce in the fourth quarter. This segment is almost entirely comprised of X64-based servers, and the lion's share of them run Windows as their dominant operating system. Midrange boxes, which cost between $25,000 and $250,000, which include high-end X64 machines as well as RISC/Itanium servers sporting Unix and proprietary operating systems as well as some mainframes, experienced a 5.3 per cent decline in Q4 2009.
And thanks to stalling big iron machines based on Itanium, RISC, and mainframe processors that sell for more than $250,000, the high-end segment of the server space had a 23.6 per cent decline in the final quarter of the year.
For the past five quarters, the midrange and high-end markets have been losing steam, and this is the first quarter where any segment actually gained some steam. And predictably, given the economics and the improving features on X64 iron, the volume segment was the first part of the server arena to recover.
And, perhaps it will be the only part of the server market to recover. We'll see.
Servers definitely do Windows
In terms of operating systems, Windows was the big winner in the fourth quarter, and not just because there are some very powerful X64 machines on the market but because Windows Server 2008 R2 was out the door last July and helping to drive upgrades to Microsoft's latest Windows server OS from prior releases.
IDC says that across all architectures (including a smattering of Windows on Itanium), global Windows server revenues in the fourth quarter of 2009 were up by 13.7 per cent to $5.4bn, with shipments only rising 5.5 per cent.
Yes, Virginia, there was a Santa Claus, and he had server virtualization in his bag in the quarter, driving up average selling prices as companies consolidated Windows boxen. Windows accounted for 41.6 percent of all server revenues in the quarter, and this was the highest revenue level for Windows in two years, according to IDC
Unix server sales, by stark contrast, dropped by 18.1 per cent in the quarter to $3.9bn, and not just because Oracle's takeover of Sun Microsystems was stalled, causing customer confusion. Unix systems lost more than six points of share of the server pie in the quarter, and that was due to the impending announcements of IBM's Power7 and Intel's Itanium 9300 processors as much as to the Oracle/Sun drama.
If you consider Linux a kind of Unix (and I do), then you could add in another $1.9bn to the open systems/open source camp. But Linux server revenues only rose by 6.1 per cent in Q4 2009, much less than would be needed to make up the hole in Unix sales. The Uni-lin-ux collective had $5.8bn in sales, still more than Windows. But one is growing and one is shrinking.
IDC says that X64 servers accounted for 96 per cent of shipments and 55 per cent of revenues for all of 2009. And in the fourth quarter, X64 server sales rose a bit higher, capturing 57 per cent of the pie.
"Because the fourth quarter is typically the strongest quarter for high-end non-x86 systems, this represents a significant shift in trends for the market, as non-x86 servers have never held less than 50 per cent of revenue in the fourth quarter," explained Dan Harrington, a research analyst in the company's enterprise server group.
"IDC expects this trend to continue as users became more cost conscious than ever in 2010 and look to x86 servers for relief from capital and operational expenditures."
Blades mix it up
Blades were the darling of the server market, at least in terms of growth in 2009. But have fallen short of expectations set a decade ago when commercial blades first started shipping. Blades have not yet become the new rack and tower servers.
IDC believes that blade servers across all processor architectures accounted for $1.8bn in sales at the factory level, up 30.9 per cent. While blades only account for 13.9 per cent of worldwide shipments in Q4, in the X64 market, blades got 21.4 per cent of shipments.
For the year, blade servers accounted for $5.4bn in sales, about 12.5 per cent of total server sales. Hewlett-Packard is still the king of blade servers, with 54.2 percent of revenue share in Q4, compared to 28.4 per cent for IBM. That said, IBM had an impressive 64.1 per cent growth rate for blade sales in the quarter and seems bent on catching up with HP and passing it as it had done in the mid-2000s for a brief time.
Looking at the market by vendor, IDC says IBM still came out on top, and by a wider margin than Gartner's numbers for Q4 show. IDC says IBM's factory revenue for servers sold in the fourth quarter of 2009 came to $4.59bn (down 6.5 per cent), followed by HP at $3.95bn (up eight-tenths of a per cent). Dell came in number three, with $1.49bn (up 4.5 per cent), followed by Sun's $1.03bn (down 17.3 per cent) and Fujitsu's $595m (up 7.2 per cent). Other vendors had $1.3bn in sales in the quarter, down 8.9 per cent. ®