IBM Pads Server-Side Market Lead

IBM added to its lead in the server market, posting a
worldwide market revenue share of 32.5 percent on the strength of its new
Power5-based machines, according to Gartner results for the fourth quarter of
2004.

In a $50 billion server market much improved from the downturn that began in
2000, Big Blue showed a total 9.3 percent growth from the year-ago period,
selling a total of $16.1 billion in servers for the year.

This was good enough to extend its server lead over HP , which holds a 27.2 percent share and did $13.4 billion in sales
for the year. HP did lead in total shipments in 2004 with 547,698 machines
pushed out the door.

At 20 percent, Dell enjoyed the most overall revenue
growth in the fourth quarter, despite dropping out of the eight-way space and dipping 30 percent in the market for four-way systems.

“They gained 20 percent for the full year because they were able to market
and sell into the one to- two-way space and keep their prices stable through
the year,” according to Gartner analyst Michael McLaughlin. The vendor
posted a 9 percent share of the market on server sales of $4.8 billion.

Of the top four server vendors, Sun Microsystems lost
money in its server division from the fourth quarter of 2003 to the same quarter in 2004. It lost 4 percent of its revenue market share for the quarter, dipping from 11.8 percent in the third quarter 2004 to 10.6 percent in the fourth quarter.

In specific server platforms, IBM led in Unix server revenue, growing 13.4
percent year-over-year in what analysts consider a declining
market.

McLaughlin said IBM’s momentum can be attributed to strong sales of its
Power5-based pSeries systems, which feature virtualization features adapted
from the company’s mainframe systems.

Meanwhile, HP saw its Unix share dip nearly 10 percent from the previous
year, which McLaughlin attributed to operational problems a few quarters
ago. He said HP’s strategy continues to be sound after fixing channel and
sales-force issues.

“I think their transition from PA-RISC to Itanium is not as fast as they’d
like it to be, but I don’t see them losing a ton of customers to Sun or IBM,”
McLaughlin said. “Their ProLiant business definitely buoyed them.”

Sun dropped 7.1 percent in Unix revenue year-over-year, though it excelled in
the market for x86 systems, increasing an industry-high 360 percent.

“Sun has probably another few quarters to get their message across and show
their customers they’re committed to their current platform,” McLaughlin
said, noting that the vendor has issues with trying to bring Solaris 10 out in
open source and providing a single x86 CPU through AMD.

Overall, server vendors can take heart from the sales posted in 2004. Server
revenues grew a collective 7.2 percent for the year. This was higher than
the 4.9 percent total increase in 2003, when the economy began to turn
around.

Of course, it is also substantially better than the 8.2 percent and 13.7
percent total server revenue losses posted by the industry in 2002 and 2001,
respectively.