Server market grew 8.9 percent last year

Worldwide server shipments in 2006 totaled 8.2 million units in 2006, an 8.9 percent increase from 2005, while worldwide server revenue in 2006 reached $52.7 billion up 2.0 percent from 2005, according to Gartner, Inc.

"The fourth quarter of the year exhibited slower growth in x86 servers than we have seen in most recent years which constrained the results for the year as a whole,” said Jeffrey Hewitt, research vice president at Gartner. “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.”

“RISC-Itanium Unix servers were weak for the year on a global basis falling 1.6 percent in shipments and 0.8 percent in revenue,” Mr. Hewitt said. “Mainframes had the strongest revenue growth of any segment for the year pushing ahead 3.9 percent over 2005.”

IBM continued to lead the worldwide server market based on revenue in 2006. The company ended the year with an increase in revenue (1.7 percent for 2006). Gartner analysts attribute the company’s performance to 10.3 percent growth in System z/zSeries and 7.0 percent growth in System x/xSeries while System p/pSeries and System i/iSeries revenue both dropped for the year (1.2 and 14.1 percent respectively).

Of the top five global vendors, only Sun gained revenue share for the year. By pushing its share ahead 1.2 percent to reach 10.8 percent, Sun reversed a yearly revenue share decline trend that had been occurring since 2001.

In server shipments, Hewlett-Packard remained the worldwide leader for 2006 (see Table 2). Its shipment growth was 8.0 percent. The ProLiant brand grew 8.5 percent in shipments for the year while HP Integrity climbed 30.1 percent. All other HP brands declined for the year which combined with the growth of ProLiant and Integrity produced the final 2006 result.

Of the top 10 vendors in server shipments worldwide, Rackable Systems had the highest growth with a 68 percent increase for the year. The only other vendor in the top 10 to increase its shipment share was NEC (0.2 percent).

Blade servers continue to be a high-growth segment with a revenue increase of 36.5 percent and a shipment increase of 33.0 percent for the year. IBM remained in the lead with blades, but HP pulled closer, as it narrowed the revenue share gap by 2.8 percent. IBM ended the year with a 41.1 percent revenue share of blades while HP finished the year with a 32.5 percent share. These two vendors continued to dominate this form factor and totaled almost 74 percent of the worldwide blade revenue share for 2006.

Server Vendor Revenue Estimates (in U.S. $)

Company	2006 Revenue	2006 Market Share (%)	2005 Revenue	2005 Market Share (%)	2006-2005 Growth (%)
IBM	16,895,062,702	32.1	16,613,992,968	32.2	1.7
Hewlett-Packard	14,240,676,553	27.0	14,569,269,106	28.2	-2.3
Sun Microsystems	5,708,595,035	10.8	4,947,896,726	9.6	15.4
Dell Inc.	5,431,169,668	10.3	5,409,183,590	10.5	0.4
Fujitsu/Fujitsu Siemens	2,508,982,735	4.8	2,698,072,898	5.2	-7.0
Other Vendors	7,890,634,701	15.0	7,395,562,184	14.3	6.7
Total	52,675,121,394	100.0	51,633,977,472	100.0	2.0

Server Vendor Shipments Estimates (units)

Company	2006 Shipments	2006 Market Share (%)	2005 Shipments	2005 Market Share (%)	2006-2005 Growth (%)
Hewlett-Packard	2,261,074	27.5	2,093,412	27.7	8.0
Dell Inc.	1,783,445	21.7	1,701,932	22.5	4.8
IBM	1,293,825	15.7	1,200,143	15.9	7.8
Sun Microsystems	368,603	4.5	342,457	4.5	7.6
Fujitsu/Fujitsu Siemens	256,794	3.1	262,898	3.5	-2.3
Other Vendors	2,270,036	27.6	1,959,258	25.9	15.9
Total	8,233,777	100.0	7,560,100	100.0	8.9