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IBM Keeps Lead in Global Server Market

Market research firm IDC said last week that IBM Corp. remained the number one vendor in worldwide server revenue in the first quarter of 2002. It also noted the server market shrank in terms of revenue, compared to the same quarter a year ago.

IDC’s Worldwide Quarterly Server tracker named IBM the top vendor worldwide in terms of server revenue. It garnered 23 percent of sales across the globe. The report examines revenue for servers ranging from small Intel-based servers to massive mainframe machines.

Compaq Computer Corp., which has since been absorbed by Hewlett Packard Co., took the runner-up spot, with 17 percent of the market, and arch-rival Sun Microsystems Inc. grabbed 14.8 percent of server revenue last quarter. HP and Dell Computer Corp. rounded out the top five with 14.6 percent and 8 percent shares, respectively.

While some may scoff at the prospect of the combined HP/Compaq as a threat to IBM, the market share numbers tell a different story. Together, HP and Compaq took 31.6 percent of server revenue in the first quarter. Moving forward, customers may choose to shop from IBM or Sun, now that the two companies exist as a single supplier.

Integration between the two companies’ server lines has already commenced, indicated by the branding of “HP Proliant” servers, where the HP name has been slapped onto Compaq's successful "Proliant" brand of Intel-based servers.

IDC said the server market shrank in terms of overall revenue, compared to a year ago. Revenue shrank 20 percent to $10.7 billion worldwide, down from $13.4 billion in the first quarter 2001. It noted, however, that unit shipments remained flat at 1.059 million units. It is not clear whether the units represent the same types of machines sold at discount prices or if most sales were in less-expensive parts of the server market.

One area particularly hard hit is the Unix market, where Sun and IBM have their fiercest battles. Unix revenues dropped 24 percent to $4.7 billion. Sun came out on top with 34 percent market share, and HP trailed with 27 percent market share. IBM clocked in with 17 percent of the market. Although all indications suggest Compaq’s Alpha Unix server line is on the way out, the Unix market could be another area where the combined company could shake up the market: with Compaq’s 7 percent market share, the combined company accounted for 34 percent of the market, approximately the same share Sun carried.

IDC interpreted the slow server market as an indication sales would soon recover. Because growth has been flat for several quarters it believes demand for volume products would return to predictable levels of growth.

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