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Virtualization Drives Up Server Prices

Server shipments and the average selling price of servers soared in the third quarter of 2010. The latest numbers from Gartner paint a rosy picture for server vendors, with global shipments up 14.2 percent year-over-year while revenues were up 15.3 percent. IDC was a shade more Grinch-like, reporting a 13.2 percent revenue increase, to $11.8 billion, on a 13.1 percent increase in shipments. The only gloom in the report was related to Oracle, as its server business (essentially Sun) lost market share.

The market's main driver was x86-based servers, says Gartner. The revenue for this category was up 29.5 percent, on a 14.9 percent increase in unit shipments. The increase in average selling price was attributed to the need for more robust server configurations to accommodate virtualization. While RISC/Itanium Unix servers continued their downward path, with drops of 10.1 percent in shipments and 9.5 percent in vendor revenue, the "other CPU" category, mainly mainframes, grew revenues by 9.9 percent. 

Gartner reports that HP nosed out IBM for top spot in revenues, $3.94 billion versus $3.71 billion, to join its shipment domination (32.6 percent over second-place Dell at 22.9 percent). Dell, Fujitsu, and Oracle held down the next three revenue spots, with the big five accounting for almost 88 percent of the total market. Oracle was the only vendor that did not benefit in this market, retreating 2.6 percent. Unlike the previous two quarters, in the third quarter rack-optimized servers (23.7 percent in shipments, 31.2 percent in revenue) outpaced blade servers (7 percent in shipments, 26 percent in revenue). 

IDC's numbers showed a significant year-on-year increase in midrange servers, up 19.8 percent, but showed that demand for high-end enterprise systems remained soft, with revenue down 10.4 percent. While IDC also reported dismal results for the Unix platform, it expects the recovery to extend to Unix platforms in the fourth quarter. 

IDC says the third-quarter data shows that unit shipments in the midrange Unix server segment ($25,000 to $250,000) increased year over year, as did revenue, likely the result of workload consolidation from aging Unix servers and of IT build-outs for telco, banking, and government infrastructure in fast-growing economies worldwide.

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