H-P Picks Up Server Share

SAN FRANCISCO -- Servers from Hewlett-PackardHPQ picked up worldwide market share in 2007 against its competitors, especially IBMIBM, an analyst report shows.

And MicrosoftMSFT continued to gain market share for server operating systems, with Windows loaded on 66.8% of servers shipped in 2007, up from 65.8% in 2006, according to Gartner.

H-P gained 2.3 percentage points of market share, shipping 2.64 million servers last year, bringing its share to 29.8%, according to figures also from Gartner. On the losing end of the equation are IBM, which lost 1.2 percentage points, to 14.5%; Sun MicrosystemsJAVA, dropping to 3.8% of share, from 4.5% the prior year; and DellDELL, which lost 0.3 percentage points to 21.4% of the server market.

But IBM, a big provider of mainframe computers, is still the server revenue leader, with $17.04 billion in sales, according to Gartner. Mainframes carry far higher prices than do conventional x86 servers.

IBM executives disclosed during the company's most recent conference call that it will release a new mainframe by the end of February, raising the possibility that buyers have been holding off awaiting the new system. "Mainframes showed an 11.8% revenue decline, which can be attributed to a slow period in the replacement cycle timing for this server class," Gartner vice president Jeffrey Hewitt said in a statement.

Indeed, IBM's software partners have been vocal during quarterly earnings calls about expectations for strong software and service sales in 2008 on the basis of IBM's new model.

H-P's No. 2 share of server revenue grew 1.3 percentage points, to $15.52 billion, from $14.26 billion a year ago, according to Gartner. Dell's server revenue grew to $6.26 billion, from $5.54 billion in the prior year.

Worldwide server shipments grew 7.4% year over year, to 8.8 million units, making it possible for Dell to sell more servers while losing share ground. But IBM and Sun sold fewer machines than in the prior year, according to Gartner.

Fujitsu/FSC was the only other leading hardware vendor to grow market share, by 0.2 percentage points, to 3.3%, although its revenue dropped 1.5%, to $2.47 billion. Other vendors accounted for 27.1% of the market for servers shipped, also down by half a percentage point from 2006.

Fourth-quarter 2007 server shipments climbed almost 11% in spite of concerns about an economic slowdown, Hewitt said.

Blade servers continue to be a high-growth segment, up 19.9% for the year in volume and taking in 44.5% more revenue than in 2006. H-P led that segment, with 41.7% share of blades sold. IBM took second place with 30.9% of blades sold.

H-P's overall server growth for the most recent quarter was in the high-double-digits, CEO Mark Hurd said this week.

Linux, an open source operating system sold by several vendors, gained half a percentage point of share on servers shipped, to 23.7%. Both Windows and Linux gained against UNIX operating systems, whose share shrank one percentage point, to 7%.