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Server revenues stagnate in Q1, say researchers

Worldwide server revenue remained flat at US$12 billion in the first three months of the year, bucking several consecutive quarters of year-on-year growth, research firm Gartner said Tuesday.

While revenue remained flat, the total number of servers sold increased, reflecting the continuing shift in spending on lower-end x86 servers. Worldwide shipments increased about 14 percent, from 1.7 million to two million in the quarter.

Unix server revenue fell about five percent and shipments declined about one percent. Blade server shipments, however, were up 46 percent, with IBM leading that market.

While IBM maintained its edge over Hewlett-Packard Co. as the market leader in worldwide server revenue, IBM’s revenue dipped about four percent in the quarter. Slower sales of IBM’s Unix, mainframe and minicomputer servers were offset by an 11 percent jump in x86 server revenue.

Sun Microsystems Inc. meanwhile saw its server revenue rise for the first time in nearly two years, driven by sales of its UltraSparc and Opteron-based servers. And Dell Inc. uncharacteristically stumbled a bit in the quarter, with a two percent dip in revenue.

Dell shipped seven percent more servers in the quarter at 431,000 units, falling in second place behind HP, which shipped about 538,000. HP’s eight percent shipment growth was led by a 30 percent increase in shipments of Integrity servers. IBM, which fell in line behind HP and shipped about 299,000 servers in the quarter, a 19 percent boost in shipments.

Rival research firm IDC, meanwhile, reported Wednesday that based on its research methodology, the worldwide server market declined nearly two percent to about $12 billion in the first quarter of 2006 from the same year-ago quarter.

This marked the first quarter of revenue decline after about ten quarters of year-over-year growth and one quarter of flat growth, in the fourth quarter of 2005, according to IDC’s research.

While the x86 server market continued to grow, IDC researchers reported that year-over-year growth slowed to about six percent in the first quarter of 2006, compared with 13 percent year-over-year growth in the first quarter of 2005.

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