Servers in the Others Category Do Well in Q4

March 7, 2011 Timothy Prickett Morgan

If you want to get a three-dimensional view of the server racket each quarter, you need to look at the publicly available information from both Gartner and IDC. Actually, to get the correct 3D image of the market you need all of the internal information, too, plus whatever data the vendors themselves have and anything else you can nick from Forrester Research and others that count boxes and labels.

But you can’t have that unless you shell out some big bucks, and this newsletter is free as is the analysis and the advice. You’ll have to make do with what I got.

I walked you through the Gartner figures for server sales and shipments for the fourth quarter of 2010 in last week’s issue of The Four Hundred, and this week, we’ll saunter through the figures available from rival IDC. These two companies put together quarterly stats on shipments and revenues, with each taking a slightly different view of the market. Gartner looks at overall shipments and revenues by vendor as well as offering a drilldown on x64-based machines and RISC/Itanium machines running Unix and a smattering of data on different form factors. IDC cuts the market up in volume, midrange, and high-end servers as well as by primary operating system and does the vendor ranking by shipments and revenues.

Overall, IDC believes that server shipments rose by 6.1 percent, to 2.06 million units, with revenues rising 15.3 percent, to $14.96 billion. For the full year, server revenues worldwide increased 11.4 percent, to $48.1 billion, and shipments rose by 15.3 percent, to 7.6 million units. These are factory shipments out of the server vendors during the year and the quarter and into their customer accounts and reseller partners; this is not just a measure of servers consumed by end user customers. The revenue figures include the base server or chassis (in the case of a blade server), base memory, base disk, an operating system, and base I/O features. Revenue is not for barebones machines.

IDC does not provide revenue figures for the platforms in terms of their relative cost, but rather just growth figures. In the fourth quarter, sales of volume platforms, which cost under $25,000, rose by 13.4 percent, while revenues for midrange machines (costing between $25,000 and $250,000) fell by 2.1 percent. High-end boxes, which cost more than $250,000, had a 29.1 percent revenue boost, thanks in part to stabilizing Unix system sales, the move of x64-based machines using Xeon 7500 and Opteron 6100 processors moving into this category, and exploding IBM System z mainframe sales.

The midrange has been under pressure for years, both on the proprietary IBM i and OpenVMS fronts as well as for baby mainframes and Unix boxes based on Power, Sparc, or Itanium processors. Plans to upgrade these machines were in many cases put on hold during the Great Recession, and business is only now just bouncing back enough for their users to think about upgrades. In many cases, customers will stick with these platforms, but spend sparingly on them, and in others, they will move to other boxes, usually running Windows or Linux if it is a midrange machine and usually Unix with a smattering of Windows or Linux if it is a big proprietary box.

In terms of platform sales in Q4, Unix has stopped falling, but other platforms are rocketing ahead, leaving Unix boxes in the dust. IDC reckons that Unix machines accounted for $3.8 billion in revenues worldwide across all Unix systems, up only four-tenths of a point from the year-ago quarter. Linux machines, which most resemble Unix boxes, had 9.8 percent shipment growth, accounting for more than 450,000 boxes in Q4, and had 29.3 percent revenue growth, to $2.5 billion. The Linux business is booming. Windows-based servers didn’t see anywhere near that kind of growth, but did grow sales by 16.8 percent, to crest at a very impressive $6.3 billion and 1.5 million machines shipped. This is the largest number of Windows servers that have ever shipped in a single quarter, and Windows is now getting close to the revenue market share that Unix enjoyed during the dot-com boom. Even if you want to be nice and add Unix and Linux machines together to make a united Unilinux market, Windows ties it. And that Unilinux market only grew sales by 9.6 percent, to $6.3 billion.

That leaves the Others category, where IBM, Unisys, NEC, and Fujitsu mainframes, IBM and HP proprietary minis, and sundry other gear get clumped together. Other platforms accounted for $2.4 billion, up 28.8 percent compared to Q4 2009. IDC said that System z mainframe sales alone represented $1.7 billion, up 69.1 percent year-on-year from the $1 billion in sales. When you do the math, that means the Other Others (the non-z Other systems) actually saw revenues drop by 20 percent, to $660 million. If I had to guess, I would guess that OpenVMS did a whole lot worse than IBM i. But there’s no way to know short of hacking into IDC’s databases. And even that is not exactly the same thing as knowing.

Thanks to a very good upgrade cycle for the System z196 mainframes in Q4, IBM was able to wrest the top server seller crown back from Hewlett-Packard, which knocked the crown that IBM has held for four decades off its Big Blue head last year. IDC calculates that IBM shipped $5.59 billion in servers in the fourth quarter and $15.36 billion in machines for all of 2010. That’s 21.9 percent growth for the quarter and 8.5 percent growth for the year, giving IBM the top spots.

For the year, HP was just a smidgen behind IBM, with $15.32 billion in revenues, but grew at 18.9 percent and, quite frankly, at a growth rate that is very likely more sustainable than IBM’s Q4 mainframe spike. In Q4, HP’s server sales rose by 13.2 percent, to $4.47 billion. These bitter rivals could end up being tied in the first quarter of 2011, and then it is anybody’s guess beyond that.

Dell was the number three server seller in Q4 2010, as it has been for a long time now. Dell pushed $1.89 billion in Xeon and Opteron boxes in the fourth quarter, up 26.8 percent and besting even IBM’s growth in the quarter. For the year, Dell sold just over $7 billion in X64 gear, up an even more impressive 34.2 percent. That said, it will have to grow at this rate for several years to catch up to IBM and HP, and that doesn’t seem likely.

The Sun Microsystems server business acquired by Oracle last year continued to decline, and it is hard to say if that is real decline or Oracle walking away from unprofitable business that Sun was chasing. (My guess it is a bunch of both.) Oracle’s server revenues fell by 14.4 percent, to $883 million, in the final quarter of 2010, and dropped 14 percent for the full year, to $3.28 billion. Fujitsu was the number five server seller, as it usually is, with $541 million in Q4 sales (down 9.4 percent) and $2.19 billion in full year 2010 sales (flat from the prior year).