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New Growth and a New Leader in the Server Market

IBM regains the lead in servers, which has seen its first revenue growth in nine quarters.

With the market for servers finally showing signs of life,

IBM

(IBM) - Get Report

has displaced

Hewlett-Packard

(HPQ) - Get Report

as the leading worldwide server vendor, according to a report released Friday by IDC.

IBM now has 30.4% of the market by revenue, a gain of 2.7%, compared to H-P, which stayed flat year over year at 27.7%.

Sun Microsystems

(SUNW) - Get Report

remained in third place with a share of 13.5%, compared to 16.6% a year ago, followed by

Dell

(DELL) - Get Report

at 9.2%, up from 8.4%.

Fujitsu Siemens

was fourth, with a share of 2.7%.

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IDC's closely watched survey showed that the highly competitive server market as a whole ended a nine-quarter decline in year-on-year growth in the second quarter of 2003. However, the 0.2% growth in factory revenue to $10.6 billion is so small, "it's too soon to declare a rebound," said IDC analyst Jean Bozman.

Even so, the numbers are something of an upside surprise because IDC had expected the market to decline by 1.7%.

Unit shipments of servers rose 17.5% to more than 1.2 million units, "clearly demonstrating that average sales prices in the worldwide server market have continued to slide," Bozman said.

The server market can be sliced many different ways, giving nearly all of the leading vendors and platform proponents something to brag about.

IDC said the Windows server market, now the largest single segment by units worldwide, grew nearly 11.5% by revenue during the quarter, while unit sales grew by 27.1% over last year. Windows servers accounted for $3.1 billion in sales.

Sales of Unix servers were higher at $4.3 billion during the quarter, but that was a decline of 5.2%. Sun, with a share of 33%, now leads this category, pulling ahead of H-P (31.4%) and IBM (24.6%).

And the X86 server market (made up of servers built around

Intel

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and

AMD

(AMD) - Get Report

chips) grew more than 21% by units and 9% by revenue.

Unit shipments for Linux servers grew 42%, faster than any other server-market segment, while Linux server revenue posted nearly a 40% gain to $650 million.

H-P's response was quick. "H-P is number one in blades, Linux and industry-standard servers, including X86 and Itanium. These are the hottest server markets fueling a new trend of growth in industry standard platforms," Mark Hudson, the Palo Alto, Calif., company's vice president of marketing for enterprise servers and storage, said in a prepared statement.

Even though IBM doesn't lead in blade servers (small units that can be plugged in or out of larger servers on the fly), it did increase its share in that market by 26 points, and grew its Unix server revenue by 20.4%.