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May 31, 2010

On average, global sales of Linux servers grew considerably in the first quarter, according to recent numbers put together by IT market researcher IDC, with revenues at the factory level among server makers rising 4.7 per cent to $10.42 billion. Servers running the Windows OS grew even more, IDC said.

Considering the slump of worldwide server sales thanks to the global economic recession that began in January 2009, this is the first quarter of growth on an annual basis for at least seven quarters back to back.

"IDC expects the recovery to extend to Unix and mainframe platforms in the second half of this year as the technology refresh extends from volume to value-oriented systems with somewhat longer planning horizons," said Matt Eastwood, group vice president of enterprise platforms at IDC.

He added "it's also important to note that we are in the middle of one of the sharpest periods of market inflection in the past ten years and that we expect significant shifts in technology utilization and market shares to occur as the recovery continues."

IDC is hinting that Unix and large mainframes probably won't bounce back quite as high as their platform suppliers are clearly hoping for. But at the same time, no legacy platform dies easily or quickly either, so we'll all be living with Unix and mainframe systems for still a long time to come.

By primary operating system platform on the servers, IDC says that Windows was once again the dominant operating system in terms of the revenues it drove in the first quarter of 2010.

IDC says that Windows got the biggest percentage of the server market in its history in the first quarter, at almost 49 per cent of global server sales, thanks to revenues for Windows servers rising by 33.6 per cent to $5.1 billion.

However, Windows server shipments were up only 28.3 per cent year-over-year, which means that Microsoft's Server 2008 operating system is being deployed on larger and more expensive servers.

Revenues didn't climb back to their pre-crash levels in the first quarter of 2008 however, when global server sales topped $13.15 billion.

IDC says it might be a long time before we see those numbers again, and some people are finally coming around to the idea that it may never happen again unless something radical happens to either increase the amount of crunching companies do or the pace of server capacity increases slows down, thereby pushing up selling prices.

IDC originally revealed that Windows wasn't the fastest-growing platform in the first quarter, with Linux server sales up 36.5 per cent growth, to $1.9 billion in Q1, but has since remade the numbers and now says Linux servers only saw about 20.4 percent sales growth in the first quarter, to $1.7 billion.

Linux servers accounted for a little over 16.1 percent of the server market in the quarter, up more than 4 percentage points from the year-ago quarter.

IDC also added that the recovery in server spending was driven by customers of all sizes buying x64 servers after putting off at least some system purchases for one or two years during the recession.

Both IBM, HP and Oracle - the three Unix platform providers that account for the bulk of Unix server sales - all had products in transition during the first quarter, which hurt sales, and IBM's mainframes are expected to be upgraded in the second half of this year, which negatively affected sales of this legacy system.

If the global economy had gotten even worse than it did, you can bet a money-losing IBM hardware business would be put up on the auction block, a bit like Big Blue did in 2004 when it sold its PC business to Lenovo.

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Source: IDC Research.

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