Linux, Windows Server Demand Drives 24% GainLinux, Windows Server Demand Drives 24% Gain

At a time when overall server sales are experiencing 11% year-over-year growth in factory revenue, demand for Linux and Windows servers continues to increase at the expense of Unix machines, a new IDC study finds.

Server unit shipments increased 23.8%, year-over-year, in the second quarter of 2010, up slightly from 23% shipment growth in the prior quarter, IDC said. This represents the most rapid year-over-year quarterly server shipment growth in more than five years, and is the fastest revenue growth since 2003, according to IDC's Worldwide Quarterly Server Tracker.

"The server market is at a crossroads. This is the fourth consecutive quarter of improving server market demand and the fastest quarterly server revenue growth IDC has reported in more than 5 years," said Matt Eastwood, group VP of enterprise platforms at IDC.

Demand for Microsoft Windows servers was propelled, in part, by the accelerating x86 server market, which saw a 36.6% increase in hardware revenue and a 28.2% surge in unit shipments, year-over-year, the researcher said. For the quarter, Windows server revenue hit $5 billion, representing 46.5% of overall quarterly factory revenue, IDC determined.

In fact, x86 server revenue grew 35.3% last quarter, hitting $7 billion worldwide, with unit shipments of 1.8 million servers, said IDC.

"Within the x86 server market, enterprise spending has had a strong return through server refreshes," said Reuben Miller, senior analyst, enterprise servers at IDC. "As the economy begins to show signs of recovery, large enterprise businesses are gaining a better view of spending capabilities for the remainder of the fiscal year and beginning to increase their investments"

Linux server sales also grew, with revenue increasing 30% to $1.8 billion over the same period in 2009, according to IDC. Today, Linux servers account for 16.8% of all server revenue, an increase of 2.5% over the second quarter of last year, the research firm said.

However, this growth apparently came at Unix's expense: Revenue for Unix servers dropped 7.2% to $2.9 billion, said IDC. Unix now accounts for 26.3% of quarterly server spending, a decrease of 5.2% vs. the second quarter of 2009 but up 3.9 points from the first quarter of 2010, the research firm said.

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Likewise, sales of non x-86 servers -- including those based on RISC, EPIC, and CISC processors -- continued to fall, decreasing for the fifth consecutive quarter. Sales dropped to $3.9 billion in the second quarter, down 16% year-over-year, IDC found. However, IDC predicts demand for non-x86 servers will grow during the second half of 2010, bolstered by server vendors' product refresh cycles expected to help drive demand in both midrange -- priced between $25,000 and $250,000 -- and high-end server segments.

"The uptick in the midrange server market shows there was pent-up demand for more scalable servers, through replacement for aging servers and workload consolidation," said Jean Bozman, research VP, enterprise servers at IDC. "This segment was hard-hit in 2009, during the deepest part of the economic downturn to date, but IDC expects this decline to moderate in the second half of 2010, with shipments of new midrange enterprise server products in the Unix server market, and continued demand for more scalable x86 servers in the midrange segment."

Overall, HP commanded 32.5% of the worldwide server systems, based on factory revenue, followed by IBM with 29.8%, and Dell, which represented 15.6% of the market, according to IDC. Oracle and Fujitsu rounded out the top five, the research firm said.

In the blade market, factory revenue grew 30.9% compared with the year-ago period and shipments increased 13.6%, IDC found. Blade servers made up $1.5 billion in revenue or 14% of the quarterly segment's server market revenue. Led by HP and IBM, x86 systems generate more than 80% of all blade server revenue -- and blades now represent about 19% of all x86 server revenue, according to the researcher.

"Blade adoption continued to gain momentum in the second quarter of 2010, as blades accounted for its largest portion of total server revenue since the form-factor came to market," said Jed Scaramella, research manager, enterprise servers at IDC. "Vendors continue to build out their blade offerings through enhanced virtualization, management, and I/O capabilities; customers are leveraging these technologies as part of converged systems that are a building block to future internal cloud infrastructures."