Guild Companies

The latest revenue rankings for the top server vendors are out from International Data Corp and Gartner, and as is always the case, the two market researchers do not exactly agree on their market share estimates. But here's one thing they do agree on: For the first time in the history of the IT industry, a vendor--namely, Hewlett-Packard--is giving IBM a serious run for the money for the top sales spot in the market.

According to IDC, the server market, when gauged by total factory revenues worldwide, declined for the sixth straight quarter in the second quarter of 2002. In last year's second quarter, which was down 16 percent from the second quarter of 2000 from $14.4 billion to $12.6 billion, none of the server vendors were writing home saying that conditions were great. (That was, in fact, the biggest decline in server sales in any quarter in the prior five years.) In the second quarter of 2002, aggregate server sales declined another 16.2 percent to $10.5 billion, giving 2Q 2002 the distinction of tying for the worst quarter in memory for the server business.

Mark Melenovsky, director of server and infrastructure hardware at IDC, said that server sales did better than expected in the United States and in the Asia/Pacific region (with declines of only 11 percent and 7 percent, respectively), but that sales were weak throughout Europe and in Japan, two areas that consume a lot of servers each quarter. For the first time, IBM was tied with another vendor--in this case the new HP following its merger with rival Compaq--with each vendor getting a little more than $2.9 billion in server sales in the second quarter, giving them 27.8 percent market share each. IBM's market share was exactly the same in the second quarter of 2001, although it had nearly $3.5 billion in sales. The combined HP-Compaq in 2001 had nearly $3.6 billion in sales, and saw revenues drop by 18 percent to that $2.9 billion level in this year's second quarter.

IDC reckons that Sun Microsystems was the number three vendor worldwide with $1.75 billion in sales (that's 16.6 percent market share, with sales down 12.3 percent and therefore falling slower than the overall market).

Dell booked $884 million in sales, up 4.6 percent from last year's $844 million and giving the upstart Wintel and Lintel server maker 8.4 percent market share. Fujitsu-Siemens, a big Wintel and Unix server vendor in Europe and Asia that is expanding steadily into North America, captured $321 million in sales in the second quarter of 2002 according to IDC, giving it 3 percent of the market.

Fujitsu-Siemens has been helped by its expansion into North America, but nonetheless its sales declined by 30 percent compared to the second quarter of 2001, when it sold $458 million in machines.

The others category, which is comprised of white box server makers, vendors of specialized supercomputer or mainframe equipment, and smaller server players like Unisys and SGI, saw its aggregate sales contract by 22 percent to $1.7 billion, suggesting that those customers who are buying are now increasingly buying from one of the dominant server suppliers.

Over at Gartner, the server analysts reckon that sales worldwide and across all platforms were down 12.8 percent in the second quarter of 2002 to $10.1 billion, down from $11.6 billion in the second quarter of 2001. These numbers are very similar to the IDC figures in the aggregate. However, Gartner figures that IBM was able to retain the lead spot in the most recently ended quarter with 29.6 percent of the market or just a hair under $3 billion in sales, down from $3.25 billion in sales in the second quarter a year ago.

Gartner reckons that HP's share of sales in the second quarter amounted to 24.7 percent, giving it just under $2.5 billion in sales. In last year's second quarter, which was just when HP and Compaq were talking about merging, Compaq had 13.9 percent of the market and HP had 13.5 percent, making these two vendors the number three and number four vendors behind first-place IBM and second place Sun, which had 16.7 percent of the market at the time. Sun, which is now the number three vendor behind HP in the Gartner rankings for the second quarter, increased its share of the server market as it contracted, getting 18.4 percent of sales or close to $1.9 billion. Gartner believes that Dell garnered 7.2 percent of the market in this year's second quarter, up from a 6.5 percent share in Q2 2001. All other vendors in Gartner's survey accounted for 20.1 percent of the market in the second quarter, down from 21.4 percent in the second quarter of 2001. IBM, Sun, and Dell contracted more slowly than the market at large and HP contracted more sharply, as did the other server vendors in the world when viewed as an aggregate.