Sun's Fortunes Rise In U.S. Server Share While Dell Dives Deep

Dell, troubled by a variety of missteps of late, saw its U.S. market share drop 6.5 percent for server revenue and 3.4 percent for server shipments from the second quarter 2005, said Gartner analyst Jeffrey Hewitt.

By contrast, Sun Microsystems -- which has a small slice of the market compared to Dell -- increased its revenue share by 18.8 percent and shipments by 31.4 percent.

Hewitt said Sun has seen particular success in its AMD Opteron-based x86 servers and has started pushing those products to customers that typically would purchase its higher-end SPARC-based products.

Dell, however, has lost out on growth because it has taken the direct marketer too long to bring Opteron products onboard, he said. Dell announced its intent to ship four-way and two-way AMD Opteron-based servers but has yet to ship anything.

"Dell is on the ropes now," said Hewitt. "They were too late to market with Opteron servers and it hurt them in the four-way area."

The overall U.S. server market grew by 5.5 percent in revenue and 15.9 percent in shipments. IBM saw its revenue share drop by 2.9 percent and shipments increase by 15.2 percent while Hewlett-Packard's revenue share dropped 8 percent and shipments increased 5.7 percent.

Hewett said he was watching the U.S. -- a mature market -- for signs of increased use of virtualization that may reduce demand for new servers. But he said Gartner has not yet seen that trend make a significant impact in server buying. In fact, he said some customers are buying new, more powerful servers for virtualization.

A number of other trends are driving growth, including growth of the Internet and media downloads, and the continued replacement of expensive high-performance computers with x86-based clusters.

The increased number of servers used for Web applications is also reflected in the growth seen by vendors in Gartner's "other" category. Those vendors include smaller OEMs and whitebox makers.

For example, Rackable Systems, a custom systems maker that services customers with large data centers, saw U.S. market growth of 79.2 percent in revenue and 76 percent in shipments, he said.

Worldwide, Gartner reported that vendors in its other category grew revenue by 17.5 percent and shipments by 23.8 percent.

Worlwide server shipments were up 12.8 percent and revenue was up 2.5 percent.

Sun's growth is also evident in worldwide numbers. Based on revenue, Sun moved ahead of Dell with 13.1 percent market share, up from 11.8 percent share in the second quarter of 2005. Dell in the second quarter garnered 10.5 percent market share, down from 10.9 percent in the 2005 second quarter.

IBM topped the list with 29.2 percent market share based on revenue, though that's down from 30.5 percent share in the second quarter in 2005. HP claimed 27.3 percent share, down from 29.1 percent in the year-ago quarter.