Low-end server sales spike in tough economy

Budget custs prompt move to cheaper products

Server shipments grew in this year's third quarter, though server revenue declined as companies lowered spending to meet budgetary constraints, according to a study released by Gartner.

Purchases of more expensive systems, such as Unix servers, were put on hold as buyers tried to keep spending in check during the quarter, says Gartner reserach vice presidentJeffrey Hewitt.

Buyers instead opted to buy lower priced x86 systems, which saw a growth in shipments during the third quarter. However, vendors saw revenues on x86 systems drop on lower average selling prices, Hewitt says.

Server markers shipped more lower-priced x86 servers with two and four processor sockets, which led to more aggressive pricing on servers, he says.

Coupled with lower-end server purchases, companies are also investing in new server technologies such as virtualisation, where server workloads are consolidated into virtual environments, Hewitt says. That helps reduce spending on server technologies as companies try to meet budgetary constraints.

Blade servers with x86-based chips also witnessed healthy growth during the quarter, Hewitt says. Companies are taking advantage of the flexibility provided by blade servers to work in different environments, from performing basic applications to being scalable enough to handle heavier workloads in datacentres, he says.

Total server shipments in the third quarter this year were 2.3 million units, a 4.4% increase compared to the third quarter of 2007. Hewlett-Packard was the world's top server vendor, shipping 724,024 units, a 11.4% increase over last year, giving the company a 31.2% market share. Dell was second, shipping 500,470 units, a 3.3% increase. IBM was third, shipping 308,524 units, a 3.5% compared to last year.

HP was the top x86 server vendor, shipping 708,977 units, taking 31.9% of the market and growing 12.3% year-over-year. Dell was second, shipping 500,470 units, followed by IBM, which saw shipments drop by 1.8% to 278,721 units.

Worldwide server revenue dropped by 5.4 percent to US$12.7 billion (NZ$23.5 billion) compared to last year's third quarter. All major server vendors, including IBM, Hewlett-Packard and Dell saw server revenues drop during the quarter, with top Unix server vendor Sun Microsystems recording the highest drop, 13.7%.

Unix shipments totaled 86,646 units during the third quarter, a 16.1% year-over-year decline.

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Tags managementeconomyLow-end servers

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