According to the International Data Corporation's (IDC) Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market declined 3.9 percent year over year to $13.0 billion in the fourth quarter of 2009 (4Q09). Although this was the sixth consecutive quarter with a year-over-year revenue decline, it was the second consecutive quarter with sequential quarter-over-quarter revenue growth. Worldwide server shipments increased 1.9 percent to 1.9 million units in 4Q09 when compared with the year-ago period. For the full year 2009, worldwide server revenue declined 18.9 percent to $43.2 billion when compared to 2008, while worldwide unit shipments declined 18.6 percent to 6.6 million units.

On a year-over-year basis, volume systems experienced the sharpest rebound with 9.9 percent revenue growth. Demand for midrange servers (servers priced $25,000 to $250,000) improved with a year-over-year factory revenue decline of 5.3 percent. The slowdown extended to the high-end segment where factory revenue declined 23.6 percent when compared to 4Q08 as several product refresh cycles planned for early 2010 stalled market demand. This is the first time since 3Q08 that all three server segments have not experienced a year-over-year revenue decline in the same quarter, offering further evidence that a recovery is underway.

"Market conditions improved significantly in the fourth quarter as the marketplace transitioned from recent stability to growth in several critical server segments. Customers are actively re-evaluating their IT needs and refreshing their infrastructures, and the fourth quarter represents the beginning of a market inflection," said Matt Eastwood, group vice president of IDC's Enterprise Servers group. "While many customers sat on the sidelines during 2009, significant innovation continued as server vendors prepared for an expanding market opportunity in 2010 and beyond. Optimal conditions for market inflection occur only once a decade and IDC believes that market shares could shift dramatically as the winners and losers of this new market cycle are determined, with those who are best positioned to meet increasingly sophisticated IT needs across the market gaining share."

Overall Server Market Standings by Vendor

IBM held onto the number 1 spot in the worldwide server systems market with 35.4 percent market share in factory revenue for 4Q09, as revenue declined 6.5 percent year over year. Although IBM experienced weakness in its System z mainframe system, demand for x86-based System x servers improved significantly in the quarter. HP held the number 2 spot with 30.5 percent share for the quarter as revenue increased 0.8 percent compared to 4Q08. HP was helped by strength in demand for its x86-based ProLiant servers. Dell maintained third place with 11.5 percent factory revenue market share in 4Q09. Dell experienced 4.5 percent revenue growth compared with 4Q08 due to strength in demand from enterprise, public sector, and its datacenter solutions customers. Fourth place Sun Microsystems experienced a year-over-year revenue decline of 17.3 percent in 4Q09 to 8.0 percent market share while Fujitsu, experienced a 7.2 percent increase in factory revenue holding 4.6 percent revenue share in 4Q09.

Top Server Market Findings

• Microsoft Windows server demand was positively impacted by the accelerating x86 server market as hardware revenue increased 13.7 percent and unit shipments increased 5.5 percent year over year. Quarterly revenue of $5.4 billion for Windows servers represented 41.6 percent of overall quarterly factory revenue. This is the highest Windows server hardware revenue in two years.
• Linux server demand also improved in 4Q09 with revenue growing 6.1 percent to $1.9 billion when compared with the fourth quarter of 2008. Linux servers now represent 14.7 percent of all server revenue, up 1.4 points over 4Q08.
• Unix servers experienced 18.1 percent revenue decline year over year when compared with 4Q08 as customers waited for additional detail on the Sun-Oracle server roadmap as well as new IBM POWER7 and HP Integrity servers based on Intel Itanium 9300 processors. Worldwide Unix revenues were $3.9 billion for the quarter, representing 29.9 percent of quarterly server spending (down from 36.2 percent of quarterly server spending in 4Q08).

x86 Industry Standard Server Market Dynamics

The x86 server market accelerated sharply in 4Q09, growing 12.6 percent in the quarter to $7.3 billion worldwide as unit shipments increased 3.8 percent to 1.9 million servers. Each of the top 5 server vendors experienced positive x86 server revenue growth in the quarter. HP led the market with 39.3 percent revenue share. Dell retained second place securing 20.3 percent revenue share while IBM experienced the sharpest growth and now holds 19.6 percent revenue share – a 3.5 point year-over-year share gain. As a result of a particularly weak first half of the year, worldwide x86 server revenue for 2009 declined 14.6 percent to $23.7 billion, while worldwide x86 unit shipments decreased 17.8 percent to 6.4 million units.

"In 2009, x86 servers captured more than 55 percent of all server revenue and more than 96 percent of all server units shipped worldwide," said Dan Harrington, research analyst, IDC's Enterprise Server group. "This represents a continuation of the aggressive share gains that x86 technology has enjoyed over the last five years. Interestingly, x86 captured more than 57 percent revenue share in the fourth quarter of 2009. Because the fourth quarter is typically the strongest quarter for high-end non-x86 systems, this represents a significant shift in trends for the market, as non-x86 servers have never held less than 50 percent of revenue in the fourth quarter. IDC expects this trend to continue as users became more cost conscious than ever in 2010 and look to x86 servers for relief from capital and operational expenditures.”

Bladed Server Market Shows Strong Shipment and Revenue Growth

The blade market continued to grow in the quarter, reaching a new quarterly revenue high. The segment accelerated sharply with factory revenue increasing 30.9 percent year over year with shipment growth increasing by 8.3 percent compared to 4Q08. Overall, bladed servers, including x86, EPIC and RISC blades, accounted for $1.8 billion in the fourth quarter, representing 13.9 percent of quarterly server market revenue. More than 87 percent of all blade revenue is driven by x86 systems where blades now represent 21.4 percent of all x86 server revenue. HP maintained the number 1 spot in the server blade market in 4Q09 with 52.4 percent revenue share and IBM finished with 28.4 percent revenue share. IBM significantly outperformed the market with year-over-year revenue growth of 64.1 percent, gaining 5.7 points of blade market share in the process. For the full year 2009, worldwide blade server revenue grew 2.0 percent year over year to $5.4 billion, the only major server market segment to experience growth in 2009.

“Blades remained a bright spot in the server vendors’ portfolios," said Jed Scaramella, senior research analyst, IDC's Enterprise Server group. “They were able to grow blade revenue throughout the year while maintaining their average selling prices. Customers recognize the benefits extend beyond consolidation and density, and are leveraging the platform to deliver a dynamic IT environment. Vendors consider blades strategic to their business due to the strong loyalty customers develop for their blade vendor as well as the higher level of pull-through revenue associated with blades.”

Top Five Corporate Family, Worldwide Server Systems Factory Revenue,
Fourth Quarter of 2009

(Revenues are in Millions)

IDC's Server Taxonomy

IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers, midrange servers and high-end servers. The revenue data presented in this release is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments.

IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture. For more information, please contact Hoang Nguyen at 508-935-4718 or This email address is being protected from spambots. You need JavaScript enabled to view it..

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 46 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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