The server market got a first opinion about its health from Gartner earlier this week, and now, IDC dons the white coat and snaps on the rubber gloves to give the third quarter server racket a full checkup and a second opinion.
By IDC's count, server peddlers moved $11.81bn in machinery in the third quarter, a 13.2 per cent increase over the year-ago period. IDC did not provide an overall shipment number for the server space in Q3 (as it never does), but did say that shipments rose by 13.1 per cent.
Unlike Gartner, which looks at the overall market by vendor and then breaks it down into x64 and RISC/Itanium categories in the data it discloses to the public, IDC breaks server sales into categories ranked by price band and primary operating system on the box. By necessity, IDC has to estimate the operating system installations on the boxes that went out the vendor factory doors and into the data centers and data closets of the world in Q3, since some machines ship without an operating system or have the one on the box nuked when it arrives.
Even with a rebounding System z mainframe lineup from IBM, the high-end part of the server market declined by 10.4 per cent in the third quarter. Blame the Power7 and Itanium 9300 transitions for IBM's Power Systems and Hewlett-Packard's Superdome 2 machines, as well as continuing sluggishness in the Oracle/Fujitsu Sparc Enterprise M series. (In IDC's world, a high-end server costs more than $250,000.) IBM's System zEnterprise 196, which started shipping at the end of the third quarter, accounted for $1bn in sales in the quarter, an increase of 14.8 per cent compared to last year. The high-end market has been contracting for two years straight now.
In the midrange, which means machines that cost between $25,000 and $250,000, sales were up, but not because of robust Unix system sales as in years past but thanks to the sale of fatter x64 boxes to support virtualized workloads. IDC reckons that midrange boxes had a 19.8 per cent revenue bump in Q3, while volume systems (which cost less than $25,000) had a 22.8 per cent revenue rise. That was the second consecutive quarter of year-on-year revenue growth for midrange boxes, and a sign that the midrange is starting to regain its footing.
"The server market experienced its strongest growth in ten years in the third quarter of 2010," explained Matt Eastwood, group vice president of enterprise platforms at IDC. "All geographic regions exhibited positive growth for the second consecutive quarter as the infrastructure build-out and refresh extends across SMB, enterprise, public sector, and cloud/hoster organizations. While much of the third quarter refresh occurred in x86 and CISC-based mainframes, IDC expects the recovery to extend to Unix platforms in the fourth quarter of 2010."
That has to be a sign of relief for IBM, HP, Oracle, and Fujitsu, which have been waiting for a Unix systems upgrade cycle to come along now that the Great Recession is over in many parts of the world. By IDC's casing of the server racket, Unix server sales fell by 9.7 per cent to $2.5bn in Q3, and IDC blamed it on upgrade deferrals by Unix shops. There is some hope, though. The Unix midrange, bolstered by new products from IBM and HP, showed both shipment and revenue increases in Q3, according to IDC. But intense competition and price cutting are eroding sales in the volume and high-end part of the Unix server market.
The big winners in the third quarter were, as you expected, Windows and Linux. Revenues for servers running Windows operating systems shot up 26 per cent in Q3, to $5.6bn, and shipments of Windows-based machines rose by 14.7 per cent. When revenue grows faster than shipments, people are buying fatter boxes. Linux server revenues rose by 32.6 per cent to $2.1bn; IDC did not return a call at press time to get a figure for Linux server shipment growth in the quarter.
Sales for x64-based boxes rose by 13.8 per cent to 1.9 million units, resulting in $7.8bn in aggregate revenues, up 28.1 per cent. There is no question that many companies are buying fatter boxes to do virtualize their workloads, even as hyperscale data centers running Web 2.0 workloads are stripping down to their skeletons and going skinless with cookie sheet designs.
Everyone is curious about blade servers, so IDC breaks these out separately in its public data. Blade server revenues across all processor architectures rose by 23.1 per cent to $1.7bn; blade shipments were up only 5.5 per cent. Some 88 per cent of all revenue from blades comes from x64-based machines, a much higher penetration of revenues than the x64 architecture enjoys at large. Across all form factors, x64 machines account for 66 per cent of revenues, but the vast majority (north of 95 per cent most quarters) of shipments.
By vendor, using its factory revenue estimates, IDC puts HP at the top of the server heap, with $3.94bn in sales (up 22.2 per cent), followed by IBM with $3.61bn in server revenues (up 9 per cent). Dell ranks third, with $1.67bn in revenues (up 18.2 per cent), with Oracle taking up the fourth pole position in the server race with $786m (up nine-tenths of a per cent). Fujitsu rounds out the top five, with $608m in revenues, up only 2.4 per cent. Other vendors accounted for $1.2bn in server revenues in Q3, up 7.4 per cent but still dragging down the market. ®