Fourth Quarter Server Market Continues to Stabilize, A Sign That Normal Seasonality Is Returning, IDC Says

FRAMINGHAM, MA – FEBRUARY 28, 2003 – Although the server market declined 5.2% in Q4 2002 to $12.3 billion in terms of factory revenue from the same quarter a year ago, the server market experienced its strongest sequential growth in the last three years. The overall server market grew 15.2% from Q3 2002, fueled by strong growth in the entry server market (servers priced less than $100,000). The entry server market itself grew nearly 18% sequentially and nearly 14% year-over-year. The fourth quarter results were in line with IDC’s expectations.


"The strong sequential growth is a sign of assurance that the server market will return to more normal seasonal predictability later this year," said Jean S. Bozman, vice president of Global Enterprise Server Solutions at IDC. "As customers demand richer technology configurations at lower price points, the entry market will continue to lead market growth as vendors focus on entry products to meet those demands."

In the fourth quarter, IBM extended its lead in the overall server market with a 36.2% share, gaining more than 2 points of share from a year ago. Dell and Sun Microsystems also posted slight year-over-year market share gains, with 1.5 points and 0.2 points respectively.

For all of 2002, worldwide server factory revenues declined 11.6% year-over-year to $44.3 billion while unit shipments increased 5% to 4.481 million. IBM remains number 1 with 29.4% share followed by HP with 23.8% share. If HP and Compaq shipments were combined for the full year, HP would be in the number 2 position with 27.8% share.

In the highly consolidated UNIX server market, the competition continued to be fierce during the quarter. HP and IBM tied for the number 1 position in Q4 2002, each with 30% revenue market share inclusive of both Intel and RISC UNIX based systems. Sun Microsystems followed closely behind with 28% share. The UNIX market declined 9.5% to $5 billion from a year ago quarter. For the full year, Sun Microsystems led the market with 32% share followed by HP with 30%. However, by combining Compaq and HP as one entity for the full year, HP would have tied for the number 1 position in the UNIX market.

"As we indicated last quarter, the number 1 position in the UNIX market is very unpredictable," said Steve Josselyn, research director, IDC's Enterprise Server Fundamentals program. "This quarter there was no clear leader as the top three vendors fought head-to-head, resulting in ties in multiple segments of the UNIX market."

The Linux server market was the brightest spot during the fourth quarter, posting a 41% increase to $607 million from a year ago quarter. "As vendors continue to offer more compelling business and product strategies to support the Linux market, the competition has definitely increased," said Mark Melenovsky, research director, IDC’s Internet Infrastructure program. "While HP continues to lead the Linux market, the number two and three spots are one share

point apart." IBM with 20.5% share edged out Dell by one point for the number 2 spot.

Top 5 Vendors, Worldwide Server Factory Revenue, Fourth Quarter 2002

(Revenues are in Millions)

Q4 2002 Market Q4 2001 Market Revenue Growth

Vendor Revenue Share Revenue Share 2002/2001

IBM $4,423 36.2% $4,385 34.0% 0.9%

Hewlett-Packard $3,167 25.9% $3,842 29.8% -17.6%

Sun Microsystems $1,430 11.7% $1,488 11.5% -3.9%

Dell $981 8.0% $845 6.5% 16.1%

Fujitsu Ltd. $280 2.3% $346 2.7% -19.0%

Others $1,950 15.9% $2,001 15.5% -2.6%

All Vendors $12,231 100% $12,907 100% -5.2%

NOTE: Data for Hewlett-Packard includes revenue for both Hewlett-Packard and Compaq

Top 5 Vendors, Worldwide Server Factory Revenue, Full Year 2002

(Revenues are in Millions)

2002 Market 2001 Market Revenue Growth

Vendor Revenue Share Revenue Share 2002/2001

IBM $13,015 29.38% $14,226 28.39% -8.51%

Hewlett-Packard $10,531 23.77% $7,157 14.28% 47.14%

Sun Microsystems $6,042 13.64% $6,852 13.67% -11.82%

Dell $3,650 8.24% $3,439 6.86% 6.14%

Fujitsu Ltd. $1,558 3.52% $1,815 3.62% -14.13%

Compaq $1,769 3.99% $7,746 15.46% -77.16%

Others $7,739 17.47% $8,878 17.72% -12.83%

All Vendors $44,305 100% $50,113 100% -11.59%

NOTE: Hewlett-Packard and Compaq are combined Q2 2002 to Q4 2002. Compaq is separate in Q1 2002.

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.

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