Proprietary Servers Take Their Lumps, Linux Servers Float On Cloud 9
December 10, 2012 Timothy Prickett Morgan
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If you want to understand the server racket and you don’t have thousands of dollars to blow, you have to rely on the publicly available information available from Gartner and IDC to try to get a sense of what is going on out there. The market statistics do not map perfectly between the two companies, but you get a better picture than you can from either alone. What the two companies certainly agree on is that the server market is under pressure, and particularly in the non-X86 portions of the market as most midrange and high-end server makers are in the middle of processor and system transitions. IDC calculates that server revenues in the third quarter ended in September across all types was off 4 percent to $12.2 billion. Server unit shipments were down a smidgen in the second quarter, but rose six-tenths of a point in the third quarter, to 2.1 million machines. IDC lets out a bit more fine-grained detail on server sales by primary operating system type, and I reckon that given the prevalence of virtualization these days and the fair number of bare-metal machines that get sold, there has to be a certain amount of black art in trying to figure out what operating systems are pinned onto what servers, but let’s assume that whatever system they have for figuring this out is valid. In that case, Linux-based servers were the big winners in terms of growth and Windows was the big winner in terms of market share. After nearly two decades of striving, Windows is not only the dominant server platform, but it has a higher market share than all of the Unix together generated during the dot-com boom, breaking through the 50 percent share barrier for the second time. Linux server sales are being accelerated by cloud deployments and by supercomputer cluster sales, and revenues rose by 6.6 percent to $2.6 billion in the third quarter. Linux-based systems had 21.5 percent of the total server pie worldwide, IDC reckons, and assuming that cloud deployments accelerate and the HPC market continues to grow, there’s no reason why Linux should not continue to outgrow the market at large. Granted, it may not have a 10.6 point spread as it did in the third quarter. Ironically, Windows server revenues were actually down nine-tenths of a percent in the period, but the market shrank so much faster that Windows platforms actually gained revenue market share, hitting 51.1 percent of the server pie in Q3 with $6.2 billion in sales. It was not a good quarter for Unix and proprietary system sales, of course, which The Four Hundred has been talking about for the past several months. It is no surprise at all with IBM, Hewlett-Packard, Oracle, and Fujitsu all introducing new processors either late this year or early next year. IBM’s System z12 mainframes were introduced in the late summer and are only now just ramping. IDC says that Unix system revenues contracted by 14.2 percent, to $2.1 billion, in the third quarter, and if you do the math, then the Others category, which includes proprietary systems in aggregate, saw a 24.1 percent decline to $1.32 billion. Incidentally, Gartner believes that IBM’s Power Systems revenues for machines running AIX rose by eight-tenths of a point and that it gained 7.9 points of market share. So the Unix decline is really on Oracle and HP. The market for all non-X86 servers as a group contracted by 17.1 percent to $3.3 billion. IBM ranked first among all server makers, according to IDC, with $3.5 billion in revenues, followed by HP with $3.33 billion. IBM’s server revenues across all platforms declined by 7.6 percent while HP’s server sales across all platforms was down 11.9 percent. HP should rebound now that Itanium 9500 chips are out from Intel and it will start ramping up shipments of its new Integrity and Superdome 2 machines, which we told you about a few weeks ago. Interestingly, the Itanium 9500 upgrade offers customers at least three times the oomph with the new chips at the same time as the company is holding its system and HP-UX operating system prices constant. HP charges for HP-UX on a per socket basis, not on a per-core basis as IBM does with IBM i and AIX, and to put it bluntly, HP is offering its Unix customers one hell of a deal. And one that it has to or it will lose even more customers. Dell grew its server business by 8.2 percent in the third quarter, to $2.09 billion, and continues to eat market share from HP and IBM, and Oracle and Fujitsu continue to see sales drop. Oracle’s server sales were off 23.1 percent to $588 million and Fujitsu’s sales were off 22.2 percent to $465 million in the third quarter, and the bottom just doesn’t seem to be in sight for either. What I can tell you is that server upstart and networking giant Cisco Systems is making headway and eating share, with revenues up 58 percent in the quarter to $419 million and making it the number six vendor ranked by revenues. Lenovo was up 44.6 percent to $104 million and Inspur, another Chinese maker, grew 168 percent to $131 million, blowing by even Lenovo. 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