For Servers, The Sky's The Limit

The server market posted some excellent numbers recently. Research firm IDC reported that both ends of that computing spectrum -- enterprise class and volume servers -- experienced strong revenue growth. Enterprise servers increased revenue by 6.1 percent, while volume servers, which really are the engine of this market, grew by a remarkable 21 percent.

The one down spot in all this was smack dab in the middle. While it was the third consecutive quarter of year-over-year growth for high-end enterprise servers, midrange enterprise servers fell 11.7 percent for that same period.

What accounted for the stellar growth at the top and bottom of the market (no offense, volume servers)? A combination of market influences, but three specifics leap to mind: a strong x86 server market, a robust Linux server economy and -- gasp! -- a change of heart by U.S. CIOs.

First, there ain't no stopping those x86 servers. According to IDC, factory revenue grew 13 percent to almost $5.0 billion globally. That number beats the revenue produced by RISC-based servers worldwide for the second consecutive quarter. And the number of boxes moved increased dramatically also: Unit shipments grew 22.4 percent. That's more than 1.3 million servers worldwide. For all its recent woes, Hewlett-Packard performed nicely here, outpacing (along with Dell) the category's growth rate, posting year-over-year unit shipment growth of 24.2 percent (Dell managed 29.4 percent growth).

Linux servers, meanwhile, are quickly approaching the $1 billion mark in quarterly revenue. The segment showed 48.9 percent income growth, while unit shipments grew 38.2 percent, reaching 8.4 percent of overall quarterly server revenue.Lastly, a recent Forrester Research report indicates that CIOs may be significantly more optimistic about the future. Perhaps the IDC figures are indicative of that optimism, or perhaps the optimism is because of the figures that have been trending upward. Either way, Forrester's research noted that a majority of the surveyed CIOs (52 percent) said that their industry business climate was at "strong" or "very strong." In fact, they believe IT spending will climb nearly seven percent in 2005.

Now if we could only get those midrange server buyers to see the same, we'd really be in a winning position.