What IDC Didn't Say: 2Q2011 Worldwide Server Sales

IDC released its "Worldwide Quarterly Server Tracker" with server hardware sales data for the second quarter of 2011. I'd like to spend a few words discussing this report and its implications.

In IDC's press release there was some "spin," whether intentional or unintentional. Jean Bozman, an IDC analyst, said, "The Unix server marketplace is seeing some rebound in revenue, based on technology refresh for Unix server products from all major vendors." That sounds plausible but, if that were true, we would expect to see roughly equal growth among all the Unix server vendors.

No, that's not at all what's happening. Year over year, the Unix server market grew 1.5% (compared to 17.9% for the overall server hardware market — more on that in a moment). Within the Unix server market, IBM's revenue grew 14.0% and, as IDC noted, IBM gained 6.0 percentage points of marketshare.

Note that IBM had over 50% marketshare in Unix servers prior to this report, but let's consider some simple mathematics and assume IBM had exactly 50%. In order for IBM to grow revenue by 14.0% and the overall Unix market to grow 1.5%, the entire remainder of the Unix market must have shrunk by about 11%. The remainder of the Unix market is mostly HP with some Oracle/Sun, a bit of Fujitsu, and a very little bit of a couple other vendors.

So no, with respect, Ms. Bozman is not correct. The Unix server marketplace saw a rebound based solely on the strength and customer acceptance of IBM's Power servers, which were already far ahead in terms of technology and marketshare and are now accelerating far away from the pack. As predicted here, HP's Itanium server sales crashed. How much did they crash? IDC doesn't say in its press release, but simple mathematics yields a clear answer: "a lot."

IBM's System z servers really turbocharged the server hardware marketplace. IDC reports that System z revenues grew 61.1% year over year, representing 9.0% of worldwide server hardware revenue. IBM mainframes were, by far, the fastest growing servers in IDC's survey. That 17.9% overall growth rate would have been substantially lower if not for mainframe sales.

IDC cautions that these growth rates are unlikely to persist into the latter half of 2011, given global macroeconomic trends. That could well be correct. It's also a reason why, if you're a server vendor, you want to be growing fastest (and certainly not shrinking) heading into any future economic headwinds. IBM has tended to weather economic storms extremely well. If you're buying servers, that's certainly something to keep in mind.

Finally, I would caution yet again that server hardware revenues are somewhat interesting but only part of the hardware vendors' revenues associated with their platforms. That's quite evident with IBM System z mainframes, but it's also true with other types of servers, to varying extents.

by Timothy Sipples August 30, 2011 in Current Affairs


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I agree that growth rates are unlikely to persist into the latter half of 2011, given global macroeconomic trends, problems like in economics really affects the lives of the people. The sales in some companies,help increase the economic and the technology source.

Posted by: IT support Birmingham | Sep 6, 2011 8:04:09 AM

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