Sun shines in sluggish 2006 server market
Business and Law Features

Sun shines in sluggish 2006 server market

Stamford (CN) - Gartner released its 2006 server market report, which showed a 9% increase in unit shipments year-over-year, but only a 2% improvement in revenues on a worldwide basis.

According to the market research firm, annual revenues of the segment totaled $52.7 billion with unit shipments topping 8.2 million. Conspicuous events during the year included weak sales for RISC-Itanium Unix servers, which fell 1.6% in unit shipments and 0.8% in revenues during the year, while mainframes had the strongest revenue growth of any segment for the year, gaining 3.9% over 2005.

The x86 server segment, which has been the main growth driver of the server market for some time, showed a significant slower growth in Q4 and constrained the results for the year as a result. "Most of that slowdown seems to be attributable to a lengthening of the sales cycle due to the anticipated introduction of quad-core x86 processors with some lesser impact from x86 server virtualization," said Jeffrey Hewitt, research vice president at Gartner.

In the race between AMD and Intel, Intel showed first signs of competitive success as the AMD's overall market share in the worldwide server market remained flat in Q4 and increased about 1.4% in the U.S. However, AMD continues to quickly gain share in the 4-way server market, with worldwide shares climbing 3% to 40.1% in Q4; in the U.S., AMD now holds 56.2% of the 4-way x86 server market, while the 2-way share climbed from 26.4% to 27.9%.

On a vendor basis, Sun continued to outpace the rest of the market. It was the only company to post double-digit (15.4%) growth and gain revenue share (+1.2 points to 10.8%), which puts the company in third place of the ranking. IBM leads the market with revenues of $16.9 billion, followed by HP with $14.2 billion, Sun with $5.7 billion, Dell with $5.4 billion and Fujitsu/Siemens with $2.5 billion.

In terms of unit shipments HP remained the worldwide leader for 2006 with a shipment growth of 8.0 percent (2.3 million units). Dell came in second with 1.8 million units and growth of 4.8%, followed by IBM with 1.3 million units and growth of 7.8%. Sun was the only top-5 manufacturer to at least hold its 2005 market share (4.5%); overall, In server shipments. Of the top-10 vendors in server shipments worldwide, Rackable Systems had the highest growth with a 68% increase for the year. The only other vendor in the top-10 to increase its shipment share was NEC.