Worldwide Server Market Posted Double Digits Revenue Growth in the Fourth Quarter of 2003, According to IDC

FRAMINGHAM, MA – FEBRUARY 27, 2004 – According to IDC's Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market grew at 11.4% to $13.7 billion in the fourth quarter of 2003, marking the third consecutive quarter of positive growth. Worldwide server unit shipments grew dramatically by 22%, compared with the year-ago period. A favorable exchange rate was one factor leading to the very strong quarterly results, but the market grew 3% without the effects of the currency exchange rate.

Revenue growth was shown in all major categories of servers: volume servers (servers priced less than $25,000), midrange enterprise servers ($25,000 to $499,999) and high-end enterprise servers ($500,000 or more) — the first time that that has happened since the economic downturn began in 2001. Once again, volume servers led the market in showing revenue and unit growth — demonstrating the profound impact volume servers are having on the worldwide server marketplace.

"Volume server capabilities are driving into several tiers of the computing infrastructure," said Vernon Turner, group vice president of IDC's worldwide server group. "It shows that high-end server technology has cascaded to this market, and that infrastructure is being augmented by industry standards and IT is reaping the benefits."

Overall Server Market Standings

IBM held on to its number 1 spot in the worldwide server systems market with 37.9% market share in factory revenue, growing factory revenue by 17.7% compared to the year-ago quarter, driven partially by a 33% growth in its OS/390 business. HP took the number 2 spot with 25.8% share, growing revenue 9.4% compared to Q402. Sun, with 10.4% revenue share, posted a 1.7% decline in revenue from a year ago. Dell grew revenue by 19% compared to Q402, ending with 8.6% revenue share. Fujitsu/Fujitsu-Siemens, posting the strongest revenue growth of 31.3% among the top 5 vendors, rounded the top 5 with 5.4% revenue share.

For the calendar year of 2003, worldwide revenue grew 3.2% to $45.7 billion, while worldwide unit shipments grew 18.3% to 5.3 million units. IBM led 2003 with 31.6% revenue share followed by HP with 27.3% share.

x86 Industry Standard Server Market Dynamics Boost Overall Growth

The x86 server market dynamics continued to be strong, with revenue of $5.5 billion worldwide. Factory revenue for x86 servers grew 15%, while unit shipments grew 23% to nearly 1.4 million servers. "The x86 server market is growing in its importance," said Mark Melenovsky, Program Director in IDC's server research group. "The new announcements regarding Intel's 64-bit extensions to x86 architecture, and AMD's traction in its first year of Opteron shipments show that this segment is continuing to evolve. IDC expects 2004 to be a tipping point for enterprise x86-architecture server adoption."

Renewed Growth in Unix Server Revenue and Unit Shipments

Unix server revenues were $5.1 billion in the quarter, growing 0.8% — and showing the first year-over-year growth in 11 quarters. In a segment that is increasingly driven by price competition, unit shipments grew 12.1% year-over-year — sharply higher than the 4.7% growth seen in Q303. IBM took the lead in the Unix server market with 32.9% market share in terms of revenue. HP took the number 2 spot with 30.5% market share, and Sun had 27.6% market share reflecting its focus on unit shipment growth, posting 18.2% growth — the strongest year-over-year unit growth among the top 5 vendors.

Linux Server Growth Accelerates, Topping 60% Year-Over-Year

Linux servers generated $960 million in quarterly revenue. Overall, Linux servers showed 63.1% growth year-over-year, while unit shipments grew 52.5% year-over-year. "Linux server growth continued to accelerate," said Jean S. Bozman, Research Vice President in IDC's worldwide server group, "demonstrating that Linux servers are taking on important roles in IT customers' computing infrastructure. What began with edge and Web-centric workloads is branching out to include HPC and commercial workloads."

Windows Server Market Shows Strong Growth

The Windows server market showed strong growth, with factory revenues increasing by 16.1% year-over-year and unit shipments gaining 23.3%. Overall, Windows servers accounted for $3.9 billion in Q403, representing 31.7% of quarterly server market revenue.

Top 5 Corporate Family, Worldwide Server Systems Factory Revenue,

Fourth Quarter of 2003

(Revenues are in Millions)

Q4 2003 Market Q4 2002 Market Revenue

Growth

Vendor Revenue Share Revenue Share 2003/2002

———————————————————————-

IBM $5,168 37.9% $4,392 35.8% 17.7%

Hewlett-Packard $3,525 25.8% $3,224 26.3% 9.4%

Sun Microsystems $1,414 10.4% $1,438 11.7% -1.7%

Dell $1,173 8.6% $985 8.0% 19.0%

Fujitsu/Fujitsu Siemens $734 5.4% $559 4.6% 31.3%

Others $1,641 12.0% $1,658 13.5% -1.0%

All Vendors $13,655 100.0% $12,256 100.0% 1.9%

Top 5 Corporate Family, Worldwide Server Systems Factory Revenue,

Full Year 2003

(Revenues are in Millions)

2003 Market 2002 Market Revenue

Growth

Vendor Revenue Share Revenue Share 2003/2002

———————————————————————-

IBM $14,439 31.6% $12,975 29.3% 11.3%