Virtualisation fails to dent server demand

Positive exchange rates are helping to drive server revenue growth in EMEA and Asia/Pacific

Worldwide server sales grew 3.5 per cent year over year to $13bn in the first quarter of 2008, according to IDC.

The analyst firm reported that, despite slowing economic growth in the US, this is the eighth consecutive quarter of positive revenue growth and the highest first-quarter revenue in the worldwide server market since 2001.

IDC's latest Worldwide Quarterly Server Tracker revealed that more than two million servers were shipped for the second consecutive quarter.

Unit shipment growth of 7.8 per cent year over year in the first quarter of 2008 demonstrates that worldwide demand for servers has remained healthy in the quarter, even as virtualisation technology is being adopted worldwide.

Linux servers posted their second consecutive quarter of solid growth, with year-over-year revenue growth of 8.4 per cent for a total of $1.8bn in the quarter, second only to the $2bn in Linux server revenue seen in 4Q07.

Linux-based servers now represent 13.7 per cent of all server revenues, according to the IDC report.

"The server market continues to experience solid growth as businesses of all types focus on expanding and refreshing their IT infrastructures for both traditional and emerging cloud-based workloads," said Matt Eastwood, group vice president of enterprise platforms at IDC.

"Geographically, the Americas was the weakest region with an overall revenue decline driven in part by a slowing US economy.

"However, it is also clear that positive exchange rates are helping to drive server revenue growth in EMEA and Asia/Pacific. Technology suppliers will need to be careful not to become too dependent on this short-term economic boost."

IBM and HP again finished the first quarter in a "statistical tie" for the number one position in the worldwide server market.

HP logged 29 per cent of sales, while IBM had 28.1 per cent. HP gained 0.2 points of share and IBM lost 0.4 points of share year over year during the quarter.

HP's growth was driven by strength in its ProLiant, Integrity and BladeSystem businesses.

Revenue growth at IBM was driven by solid performance in its System z server business.

Dell grew factory revenues 9.4 per cent year over year and moved into the number three position in the market with 12.3 per cent share for 1Q08.

Sun Microsystems' revenues declined 1.8 per cent year over year in the quarter to end on 10.5 per cent.