HP takes top server spot from IBM

HP took the top spot from IBM in global server revenue in the first quarter, as shipments from all manufacturers rose 23 percent over the previous year, according to Gartner.

The quarterly figures are a sign that businesses are starting to increase their expenditure on servers as the global economy recovers, the analyst company said. However, although the market is bouncing back, server revenue in the quarter was only around 80 percent of its peak in 2008, it noted.

"2009 typically saw users [companies] extending the lifecycles of their hardware," Gartner principal research analyst Adrian O'Connell told ZDNet UK. "I wouldn't say the market has now recovered: it is recovering."

Server revenue rose six percent year-on-year in the first quarter of 2010, Gartner said in a report released on Tuesday. The x86 servers were the fastest growing segment, showing rises of 25.3 percent in shipments and 32.1 percent in sales. In contrast, RISC/Itanium Unix servers and mainframes declined substantially, falling 28.5 percent in shipments and 26.9 percent in revenue.

In terms of form factors, blade servers performed the best, with sales up 40.7 percent year-on-year. As for vendors, HP took over from IBM as the leading server manufacturer by revenue. In the quarter, HP had 31.5 per cent of revenue worldwide, up from 28.8 percent the previous year, while IBM fell from 30.7 percent to 28.4 percent. Dell remained in third with 15.6 percent, with Fujitsu in fourth place at six percent. Fifth-place Oracle, which acquired server maker Sun in April 2009, saw its share drop from 9.6 percent to 5.6 percent.

IBM slipped from the top spot partly because businesses are waiting to buy Power7 systems from the company, Gartner said.

HP had a stronger lead in EMEA and increased its market share by revenue to over 40 percent. IBM's market share shrank considerably to 23.7 per cent in the region from 29 percent a year ago. Total EMEA server revenue rose slightly higher than it did globally, increasing 6.6 percent. Year-on-year, shipments were up 19.7 per cent in EMEA, Gartner found. O'Connell said the UK figures broadly followed the EMEA trends.

As server sales plummeted during the recession, there is now some potential demand, according to Gartner. However, that demand will be spread throughout 2010 and 2011, it said.

"To some extent, there is pent-up demand in the market. But companies will take it cautiously and slowly in going through this refresh until there is more confidence," O'Connell said.

A lack of visibility of future economic conditions and consequently a lack of visibility of their future company performance is holding back IT departments from substantial server expenditure increases, Gartner said. O'Connell noted that procurement cycles have become lengthy for high-end systems. In contrast, businesses are quicker to purchase low-end servers.

In addition, the economy has forced companies to re-evaluate how they run their IT, causing them to make different technology choices, he added. But whereas the downturn 10 years ago left IT departments with few choices, there are now considerable options to reduce costs and improve productivity, O'Connell said. He gave the use of blades, virtualisation software and cloud computing as examples.