Blades jolt server revenues, IDC says

But third-quarter revenue growth continued to decline for the ninth consecutive quarter, as businesses look toward server consolidation.

Buoyed by strong blade server sales, the worldwide server market grew 3.5 percent year-on-year to reach US$12.9 billion for the third quarter this year, IDC says.

In IDC's Worldwide Quarterly Server Tracker report, the analyst company said this was the highest growth rate in four quarters, and the largest third-quarter spending on servers since 2000.

Notably, IDC said the blade server market which grew 29.9 percent year-on-year, contributed largely to the overall server growth. Blade sales were particularly strong in the Asia-Pacific region, excluding Japan, registering year-on-year growth of 13.7 percent.

Blade servers raked in US$738 million during the third quarter, representing 5.7 percent of quarterly server market revenue.

Overall server shipments grew by 7.4 percent, registering the ninth consecutive quarter of slowing overall shipment growth, IDC said. The analyst company attributed this trend to the adoption of server virtualization and consolidation, which continue to gain a foothold in the IT industry worldwide.

Matt Eastwood, program vice president of enterprise platforms at IDC, said in a statement: "Enterprise and SMB (small and midsize business) customers alike continue to evolve their IT buying patterns based on the robust product innovation that continues to occur across the marketplace.

"For end-users, new levels of compute density mean increased power densities and expanding power and cooling challenges, which are driving different IT infrastructure acquisition patterns," Eastwood said, adding that technology suppliers have to ensure their systems, software and services meet those challenges.

Windows leads the pack
According to IDC, Microsoft maintained its track record with Windows servers, which continued to show "nice growth" as revenues in this market segment grew 4.6 percent year-on-year. Windows-based servers raked in quarterly revenue of US$4.8 billion, representing the largest single segment of the overall server market.

Linux server revenue was US$1.5 billion for the quarter with year-over-year revenue growth of 5.4 percent. Servers running the open source platform now represent 11.8 percent of all server revenue.

Unix server earnings continued to decline, with revenue falling 1.7 percent year-on-year to reach more than US$3.9 billion for the quarter. Notwithstanding, Unix still represented 30.1 percent of overall quarterly revenue.

In the x86 servers, AMD steamed ahead with revenues growing 79.7 percent year-over-year. The chipmaker accounted for 19.8 percent of worldwide x86 server revenue in the quarter.

Notably, though, archrival Intel gained x86 market share for the first time in four years, where its processors garnered 80.2 percent of all x86 server spending in the quarter.

Jed Scaramella, IDC's research analyst for enterprise server research, said: "In the third quarter, Intel was able to recapture market share in the x86 space primarily driven by the introduction of the new Woodcrest processor.

"With the new Xeon chip, Intel aimed for a rapid transition and customers have responded favorably to new features, including improvements in power consumption and built-in hardware support for virtualization software," Scaramella added.

Both chipmakers, however, have to brace themselves for continued server consolidation undertaken by businesses. According to IDC, the overall x86 server market grew 4.8 percent in the quarter to US$6.6 billion in revenues. Unit shipment growth also continued with a "moderate" gain of 8.8 percent to 1.75 million.