HP overtakes IBM in global server sales in FQ 2010

Worldwide server shipments grew 23 per cent year over year in the first quarter of 2010, while revenue increased 6 per cent as Hewlett-Packard (HP) overtook IBM as the world's top server maker by sales, according to research firm Gartner.

"We've seen a return to growth on a worldwide level, but the market has not yet returned to the historical quarterly highs that were posted in 2008, and there were some interesting variations in that growth," said Jeffrey Hewitt, research vice president at Gartner.

"Emerging regions that were expected to grow, such as Asia/Pacific, forged ahead, while some mature markets, such as the US, produced better-than-expected results, as other countries and regions had a 'mixed bag' of results," he added.

The server segments varied as well. x86-based servers grew 25.3 per cent in units and 32.1 per cent in revenue. RISC/Itanium Unix servers declined by 28.5 per cent in units and 26.9 per cent in vendor revenue, and the 'other' CPU category, which is primarily mainframes, fell 15.1 per cent in revenue.

In the North American region, the US grew the most significantly in shipments, with a 28.6 per cent increase, while Latin America had the highest vendor revenue growth at 27.9 per cent for the period.

All other regions had varying shipment and revenue increases with one exception - Japan posted a revenue decline of 0.7 percent.
HP took the lead in the worldwide server market based on revenue. HP's server revenue reached $3.4 billion, representing 31.5 per cent of the market, in the first quarter of 2010. Its share was up 2.7 percentage points year over year.

IBM fell from the No.1 spot, and it sustained a 2.1 per cent revenue decline for the quarter, affected primarily by anticipated new products in both its mainframe and Unix lines.

Of the top five global vendors, Dell, Fujitsu and HP all had revenue increases for the first quarter of 2010.

Table 1
Worldwide: server vendor revenue estimates, 1Q10 (US dollars)

Source: Gartner (May 2010)

In Europe, the Middle East and Africa (EMEA), server shipments surpassed 606,000 units in the first quarter of 2010, an increase of 19.7 per cent from the same period last year. Server revenue totalled $3.2 billion in the first quarter of 2010, a growth of 6.6 per cent from the same quarter last year

In server shipments HP, which remained the worldwide leader for the first quarter of 2010 (see Table 2) with a shipment increase of 26.6 per cent. This growth was driven by increases produced from HP's ProLiant brand.

Of the top five vendors in server shipments worldwide, Dell, Fujitsu, HP, and IBM posted increases in units for the first quarter.

As noted above, the primary driver for market growth in the quarter was the x86-based server hardware platform. There was a marked difference between x86-based servers and non-x86 server platforms for the quarter with the latter posting declines.

Blade severs had the strongest growth of any form factor with an increase of 23.7 per cent  in units and 40.7 per cent  in vendor revenue for the first quarter.

Table 2
Worldwide: server vendor shipments estimates, 1Q10 (units)

Source: Gartner (May 2010)

In Europe, the Middle East and Africa (EMEA), server shipments surpassed 606,000 units in the first quarter of 2010, an increase of 19.7 per cent  from the same period last year (see Table 4). Server revenue totaled $3.2 billion in the first quarter of 2010, a growth of 6.6 per cent  from the same quarter last year (see Table 3).

''Although the EMEA server market is returning to growth in shipment and revenue terms, we need to recognize that this is growth from a low base, as the first quarter of 2009 saw a decline of 27.1 per cent  in shipments and a decline of 34.2 per cent  in revenue year over year,'' said Adrian O'Connell, principal research analyst at Gartner. ''Nevertheless, current market levels remain below those seen at the start of 2008, indicating that there is opportunity for stronger penetration in the EMEA server market.''

Table 3
EMEA: server vendor revenue estimates, 1Q10 (US dollars)

Source: Gartner (May 2010)
*Oracle includes Sun Microsystems

In the x86 market, total volume in EMEA grew 22.2 per cent  in the first quarter of 2010. ''We've seen a pronounced bifurcation between x86 and other server platforms at the start of 2010. Typically, x86 tends to be the platform that drives growth in the market, but the pent-up demand within the x86 installed base - where life cycles had been extended during the downturn - as well as shorter sales cycles in this area, have led to divergence in growth between x86 and other platforms this quarter,'' said Mr. O'Connell.

In the first quarter of 2010, HP held the No. 1 position, with shipments growing at 23 per cent . Dell, ranked No. 2, had the strongest shipment growth of the top five vendors, with a 30 per cent  year over year increase. IBM in the No. 3 position grew shipments by 10 per cent  in the first quarter of 2010.

Overall, RISC and Itanium Unix revenues declined 27 per cent  in the first quarter of 2010. IBM led the segment in the first quarter of 2010, despite a decline that matched the overall market at 27 per cent . Although HP exhibited a revenue decline of 24 per cent  year over year, the vendor showed the best performance in the segment, and HP subsequently grew its market share by 1.5 per cent age points in the first quarter of 2010. Oracle, having closed the acquisition of Sun, moved to the No. 3 position and saw its revenue decline 31 per cent . Bull and Fujitsu maintained their fourth and fifth places, respectively.

''Challenges remain in this segment as the longer sales cycles that we see for these platforms are currently compounded by significant product refreshes for both IBM and HP,'' said Mr. O'Connell. ''The integration of Sun into Oracle is an additional factor that complicates current levels of demand. We expect demand in this segment to improve during 2010, but the vendors in this segment will be facing increasing challenges from Windows and Linux platforms.''

Table 4
EMEA: server vendor shipments estimates, 1Q10 (units)