Demand for Linux servers reaches record levels

Global demand for Linux servers reached record levels in the last quarter of 2005 to account for $1.6bn in quarterly revenue, the 14th consecutive quarter of double-digit growth, IDC reported today.

The analyst firm's latest Worldwide Quarterly Server Tracker noted that the stellar market performance of Linux servers was marked by year-over-year revenue growth of 20.8 per cent.

Linux server revenues for the full year were $5.7bn, putting it in third place for the first time from an operating system perspective.

The report said that this rapid growth is due to businesses expanding the role of Linux servers and using the operating system for a wider array of commercial and technical workloads.

The Windows server market continued to show solid growth, with factory revenues increasing by 4.7 per cent year over year.

Overall, Windows servers accounted for sales of $4.9bn in the fourth quarter of 2005, representing 33.6 per cent of quarterly server market revenue.

Windows server revenues for all of 2005 were $17.7bn, which means that for the first time the Windows server segment modestly exceeded spending for Unix servers as customers deployed more fully configured Windows servers in support of scalable enterprise workloads and server virtualisation projects.

According to the research, Unix servers experienced a 5.9 per cent decline in factory revenue year over year to $5bn for the quarter with worldwide Unix revenues for the quarter representing 34.3 per cent of overall quarterly factory revenue.

For all of 2005, Unix server revenues were $17.5bn, moving the platform from sole possession of first place from an operating system perspective for the first time in more than a decade.

"IDC continues to see end users using a mix of operating systems in their infrastructures," said Jean S. Bozman, vice president of worldwide server research at IDC.

"Each platform offers its own advantages in terms of workloads and customer preferences, and there is substantial overlap in terms of ISV applications that run on many of these server platforms.

"Although the trend is towards volume systems, we do not believe that any one platform will be in a position to force another platform out of the marketplace for many years to come."

The research noted that overall factory revenue in the worldwide server market declined 0.2 per cent year over year to $14.5bn in the fourth quarter of 2005.

This was the first year-over-year quarterly decline in revenue since the first quarter of 2003, as year-over-year quarterly comparisons become more difficult.

Worldwide server unit shipments growth slowed modestly to 10.6 per cent in the fourth quarter of 2005 compared with the year-ago period.

The IDC study also found that volume systems grew 7.3 per cent year over year and that the segment continues to be the catalyst for growth for the server market overall, gaining favour with small firms and enterprise customers alike.

After four consecutive quarterly increases, revenue for midrange enterprise servers declined 11.5 per cent year over year and the high-end enterprise server market showed a 1.7 per cent decline year over year, the fifth consecutive quarter of declining revenue for high-end enterprise servers.

"The volume server market continues to evolve as richer server configurations driven by both scale-out cluster implementations and scale-up server virtualisation initiatives continue to drive increased customer spending," said Matthew Eastwood, programme vice president of IDC's Worldwide Server Group.

"However, even in the volume segment the quarterly unit shipment growth of 11.5 per cent was two-thirds the year-over-year unit growth rate observed in the fourth quarter of 2004, illustrating a transition towards more richly configured systems in the market.

"This evolution is driven by IT managers' increased desire to consolidate and virtualise their server infrastructures as they seek to maintain balanced and manageable IT growth in the future."

In terms of vendor performance IBM retained the number one spot in the worldwide server systems market with 38.4 per cent market share in factory revenue, growing its revenue by 0.8 per cent when compared to the same quarter one year ago.

HP continued to hold the number two spot in terms of factory revenue with 26.8 per cent share, growing revenue 3.8 per cent compared to the fourth quarter of 2004.

Dell maintained third place with 9.6 per cent factory revenue market share in the fourth quarter of 2005.

Based on unit shipments, HP maintained the number one position worldwide with 30.2 per cent server shipment share, growing shipments 8.8 per cent year over year.

Dell maintained the number two spot in terms of worldwide server shipments with 23.3 per cent share, up from 21.3 per cent.