Server Growth Steps Up

Server revenue rises 3.5% in the third quarter.
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Demand for servers perked up during the third quarter, the fastest growth rate in four quarters and the best third quarter since 2000, according to a survey by market-research firm IDC.

IDC found that server revenue increased 3.5% year over year to $12.9 billion.

Blade servers, ultracompact systems used to save space and power, led the increase, growing by nearly 30% during the quarter.

Interestingly, Linux server growth continues to moderate, with year-over-year revenue growth of 5.4% to $1.5 billion, one sixth the growth rate reported by IDC in the same quarter of 2005. Servers run by the Linux operating system account for 11.8% of all server revenue.

Part of the reason for the slowdown in the Linux server growth is a result of simple math; strong quarters make year-over comparisons that much more difficult. Even so, there's a growing feeling on Wall Street that the lightning growth demonstrated by Linux on servers and corporate desktops is moderating, a trend that will make the market that much more competitive.

Windows-based servers grew revenue 4.6% to $4.8 billion and are the largest single segment of the server market.

Rival market researcher Gartner, which calculates market share somewhat differently than IDC, found that the server market grew by 4.4% to $13 billion in the quarter. The market grew by 5.5% in the third quarter last year.

According to Gartner,

IBM

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led the pack with a market share of 33.7% and revenue growth of 7.4%;

Hewlett-Packard

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was in second place with a share of 25.3%, down from 28.1%, as sales slipped by 6%.

Dell

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was in third place with a market share of 10.8% and revenue growth of 10.9%.