Gartner: Server Market Still Growing, Despite Virtualization

Just recently, Gartner published a report showing that the server market did great during all of 2007, including the fourth quarter. Server shipments rose 11 % during the fourth quarter, while revenue rose almost 3 %.

The analyst firm has now proclaimed server sales and shipments also showed strong growth in the first quarter of this year compared to last year despite continued growth of the use of server virtualization technology. Jeffrey Hewitt, VP Research at Gartner said that certain factors are “masking” the impact of server virtualization.

“A lot of the growth in physical server sales is coming from an explosion in the use of certain applications such as Web servers, which often do not lend themselves to being virtualized. Also, server virtualization is still much more accepted in mature markets such as the US, Europe, and Australia, and less adopted in fast-growing markets such as China. Additionally, customers are not running server virtualization on old hardware. Customers are buying larger servers to host virtualization. This market is so hungry for more and more horsepower. Virtualization makes it easier to host more and faster applications.”

Gartner on Thursday said that a total of 2.3 million servers were sold in the first quarter, up about 7.6 percent over the 2.1 million shipped during the same quarter last year. Revenue growth was not as strong, however. Vendors sold $13.6 billion worth of servers during the quarter, up only 4.3 percent compared to the $13.0 billion in server sales last year, Gartner said.

HP was the world’s top server vendor during the first quarter of 2008, accounting for 30.1 percent of the total worldwide shipments. Fast growth in server shipments by Dell, which boasts a 22.7 percent market share, puts that company within striking range of the top position. Dell’s shipments grew 15.8 percent over last year compared to HP’s growth of 7.8 percent.

Worldwide RISC-based and Itanium- based server shipments slipped 8.4 percent compared to last year, with all top five vendors seeing a drop in sales. However, revenue for this class of servers grew 3.7 percent over last year, with all top five vendors seeing revenue growth except for Sun, which saw revenue drop as its Solaris Unix-based focus continues to shift more towards x86-based servers, Hewitt said.

Shipments of servers with the Linux OS grew the fastest year-over-year, up 13.9 percent compared to the 6.8 percent growth of shipments of servers with Windows, Hewitt said. However, the overall base of Linux-based servers is still only half that of Windows-based servers, so in terms of absolute numbers, Windows- based server shipments grew faster.

[Source: ChannelWeb]