Computer server sales up 8 percent on low-cost units

SAN FRANCISCO (Reuters) - The worldwide market for server computers used by businesses grew 8.1 percent in the third quarter, fueled by lower-priced systems as companies seek to contain costs, market researcher IDC said on Tuesday.

International Business Machines Corp kept its leading position, with about one-third of the total server market as measured by revenue, or 32.3 percent. Hewlett-Packard Co remained in second place with a 27.8 percent share.

Dell Inc moved up to number three with 10.5 percent of the market after Sun Microsystems Inc slipped to 8.7 percent of the overall server market from 10.2 percent a year earlier, as its server revenue declined 7.6 percent in the quarter, IDC said. Fujitsu/Fujitsu Siemens rounded out the top five server makers with a 6.1 percent share.

Total factory revenue rose to US$12.490 billion in the third quarter from US$11.555 billion in the year-earlier period, the tenth consecutive quarter of rising growth, said IDC of Framingham, Massachusetts in its quarterly server-market survey.

Revenue from so-called volume servers costing less than US$25,000 grew 14.8 percent, the main growth engine for the overall server market, IDC said.

Revenue from midrange servers between US$25,000 and US$500,000 grew 3.8 percent, but high-end enterprise servers costing US$500,000 or more dipped 1.2 percent, the fourth consecutive quarterly decline for top-end servers.

"Although there was continued information technology investment across all three server classes, the volume and midrange enterprise server segments are showing the strongest growth, speaking to IT purchasers' continuing focus on cost containment," IDC said.

Quarterly revenue of US$4.6 billion for servers using Microsoft's Windows operating system represented the largest single segment of the server market for the first time, as Windows server sales boosted its revenue share by 3 percent over the year-earlier period, IDC said.

Sales of servers that use the freely available Linux operating system grew 34.3 percent, the 13th straight quarter of double-digit growth. Unix-based server revenue slipped 0.4 percent from a year earlier, while worldwide Unix revenue of more than US$3.9 billion represented 32 percent of overall quarterly factory revenue, IDC reported.