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Gartner Says Worldwide Server Revenue Increased 8 Percent in Second Quarter of 2004

Posted on: Wednesday, 25 August 2004, 06:00 CDT

Worldwide server revenue surpassed $11.5 billion in the second quarter of 2004, a 7.7 percent increase from the second quarter of 2003, according to Gartner, Inc.

"Overall, each region showed positive year-over-year growth in terms of revenue," said Mike McLaughlin, principal analyst for Gartner. "We also saw increased activity in the x86-64 market, as well as continued strong sales in the low-end server market."

IBM held its lead based on server revenue, as its market share increased to 30.7 percent in the second quarter of 2004 (see Table 1). Consistent the first quarter of 2004, Dell experienced the strongest growth rate among top-tier vendors, as its revenue increased 20.1 percent from the second quarter of 2003. -0- *T Table 1 Worldwide Server Vendor Revenue Estimates for 2Q04 (Millions of U.S. Dollars) 2Q04 2Q03 2Q03- Market Market 2Q04 2Q04 Share 2Q03 Share Growth Company Revenue (%) Revenue (%) (%) ---------------------------------------------------------------------- IBM 3,539 30.7 3,195 29.8 10.8 Hewlett-Packard 3,151 27.3 3,022 28.2 4.3 Sun Microsystems 1,506 13.0 1,464 13.7 2.9 Dell 1,133 9.8 944 8.8 20.1 Fujitsu/FSC 518 4.5 484 4.5 6.9 Others 1,699 14.7 1,611 15.0 5.5 Total 11,546 100.0 10,720 100.0 7.7 ---------------------------------------------------------------------- Source: Gartner Dataquest (Aug 2004) *T

Worldwide server shipments in the second quarter of 2004 surpassed 1.6 million units, a 24.5 percent increase from the same period last year (see Table 2). Hewlett-Packard led all vendors with 463,489 units shipped in the second quarter.

The past several quarters Dell has experienced the strongest growth rate among the top-tier vendors, however Sun exhibited the highest growth rate, with second quarter shipments increasing 38.4 percent from the same period last year. Sun benefited from an increase in demand from the telco sector for their Netra product line, as well as increased sales of high-end servers to the financial sector. -0- *T Table 2 Worldwide Server Vendor Unit Shipment Estimates for 2Q04 (Units) 2Q04 2Q03 2Q03- Market Market 2Q04 2Q04 Share 2Q03 Share Growth Company Shipments (%) Shipments (%) (%) ---------------------------------------------------------------------- Hewlett-Packard 463,489 28.9% 377,612 29.3% 22.7 Dell 337,994 21.1% 261,588 20.3% 29.2 IBM 238,721 14.9% 201,459 15.6% 18.5 Sun Microsystems 90,487 5.6% 65,382 5.1% 38.4 Fujitsu/FSC 47,072 2.9% 39,984 3.1% 17.7 Others 425,669 26.5% 342,237 26.6% 24.4 Total 1,603,432 100.0%1,288,262 100.0% 24.5 ---------------------------------------------------------------------- Source: Gartner Dataquest (Aug 2004) *T

Based on server operating systems (OS), Linux continued to show strong double-digit growth in both revenue and shipments. Linux revenue grew 54.6 percent in the second quarter, and its unit shipments increased 61.6 percent. Linux represented 9.5 percent of the overall server OS revenue.

Windows accounted for 34.4 percent of worldwide OS revenues. Unix continued its slow decline, as its revenue decreased 4.3 percent in the second quarter, and it lost more than 4 points of market share.

While Itanium still grew at strong rates, the industry saw the emergence of the x86-64 CPU space, which had a year-over-year growth rate of 2,183 percent. The largest segment is still the x86-32 CPU server market, which grew a healthy 10 percent year-over-year to earn more than $5.1 billion in the second quarter of 2004.

About Gartner

Gartner, Inc. (NYSE: IT and ITB) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 10,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Gartner Intelligence, research and events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has more than 3,500 associates, including approximately 1,000 research analysts and consultants, in more than 75 locations worldwide. For more information, visit www.gartner.com.

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