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IBM grabs lead in Unix server revenue

After lagging behind Sun for seven years, IBM took the top spot in worldwide Unix server revenue for the second quarter of 2005.

In a report IBM is hailing as a major victory for its Power5 chip, Big Blue overtook longtime market leader Sun atop the Unix server market in Q2 2005, and was also named the world's top server vendor in terms of revenue for the ninth straight quarter according to reports released last week by industry analysts Gartner and IDC.

But the race for the Unix revenue crown was a close one. According to IDC, IBM led worldwide Unix server revenue with 31% market share, followed by Hewlett-Packard at 30% and Sun with 29.5%.

IBM pSeries vice president Karl Freund said Big Blue's commitment to using its Power5 processing chip, which runs in IBM-based Unix boxes, is a major reason why it was finally able to overtake Sun in the Unix revenue space after seven straight years of trailing Sun in Q2 data, often seen as the most reliable period from which to measure the market.

According to Freund, while Sun and HP both use chips from outside vendors in their Unix servers -- the AMD Opteron and Intel Itanium chips respectively – IBM has worked hard to design a chip specifically built to address the needs of Unix boxes.

Freund said the numbers represent Big Blue's final push from "last to first," as IBM trailed both Sun and HP in the Unix space just three years ago. IBM is claiming Sun has fallen off the pace due to a series of "strategic misfires" surrounding its decision to outsource to AMD.

"This is not an accident," Freund said. "This is the result of a decade-long investment stream IBM has made to become number one, and we've done it at our competitor's expense."

Overall Q2 was a strong one for Unix servers, according to IDC, as resurgence in IT investment helped the Unix space realize $4.3 billion in factory revenue, up 2.5% from the previous sequential quarter. IDC said the growth reflects sales of richer configurations in the midrange enterprise and high-end enterprise categories.

High-end Unix servers saw 19.2% growth in factory revenue, year over year, while midrange servers saw 15.6% growth year over year.

But IDC also reported that Hewlett-Packard cut IBM's lead in overall revenue by 2% compared to the same period last year, as its revenue grew 11.5 % from Q2 2004. IDC ranked IBM first with 31.9% market share in the server space, followed by HP at 28.5%.

Despite seeing its server revenue slip 5.3% compared the same period last year, Sun finished third with a market share of 11.3%, followed by Dell at 10.5%. But no vendor saw a larger spike in revenue than Dell, which jumped 22.3% in year-to-year ratings.

IDC also reported that Linux servers posted their 12th consecutive quarter of double-digit growth, with year-over-year revenue growth of 45.1% and unit shipments that were up 32.1%. Microsoft Windows servers also showed strong growth, as revenues grew 14.3% and unit shipments grew 10.9% from Q2 2004.

Let us know what you think about the story; e-mail: Luke Meredith, News Writer

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