November 22, 2002 11:27 AM PST

IBM extends its server lead

IBM bolstered its first-place ranking in a worldwide server market that shrank 3 percent in the most recent quarter, according to new research.

In the third quarter of 2002, Big Blue's server sales increased 4 percent from $3.3 billion to $3.4 billion, while the overall market declined 3 percent from $10.9 billion to $10.5 billion, according to figures from research firm Gartner Dataquest. The sales helped IBM gain 2.1 percentage points to 32.1 percent of the overall market.

Also increasing its position in the ranking was Dell Computer, the fourth-ranked server seller, with sales that increased 16 percent from $701 million to $814 million. Dell's overall market share increased 1.3 percentage points to 7.7 percent of the total market, Gartner said. IBM's and Dell's worldwide gains reflect similar changes that took place in the third quarter in the United States.

Servers are powerful systems that run round the clock to handle tasks such as managing a supermarket chain's food inventory or running Amazon's online sales. Server sales surged during the manic Internet years but now are suffering with the economic recession, and server makers are cutting prices aggressively to try to keep from losing customers.

IBM's and Dell's worldwide growth came at the expense of No. 2 Hewlett-Packard and No. 3 Sun Microsystems.

HP server revenue declined 11 percent from $2.9 billion to $2.5 billion, while its market share dropped 2.2 percentage points to 24.5 percent, Gartner said. Sun server revenue declined 10 percent from $1.5 billion to $1.3 billion, while its market share decreased 0.9 percentage points to 12.6 percent.

In two specific segments, Intel-based servers and Unix servers, IBM and Dell also gained.

In Intel servers, where IBM remains the third-ranked seller, Big Blue increased its market share 3.7 percentage points while No. 1 HP lost 4.4 percentage points. No. 2 Dell gained 2.5 percentage points.

In Unix servers, currently the largest segment of the overall server market, No. 3 IBM gained 3.8 percentage points while No. 1 Sun lost 1.1 percentage points and No. 2 HP lost 0.7 percentage points.

Gartner predicts Intel server revenue will increase to $20 billion in 2003, surpassing for the first time Unix server revenue, which is projected to shrink to $18 billion.


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