IBM takes biggest hit as HP catches up

Blade servers were among the few bright spots in an otherwise tepid server market, according to analyst reports.

Research firm IDC recorded a quarterly growth rate of just 0.5 per cent for the entire server market, the lowest in more than a year.

Hardest hit was IBM which held on to the top spot in market share, but saw its lead over HP dwindle and its revenues drop 8.5 per cent over last year.

Much of IBM's troubles stem from a nosedive in System z server sales, according to IDC. Consumers are holding off on buying the high-end systems in anticipation of a new line of IBM servers.

Overall, analysts say that the high-end market lost more than 14.5 per cent in revenue compared to the same quarter in 2006, the largest decline in more than five years.

There were some bright spots, however. Blade server sales continued to rise, improving revenues by more than 41 per cent over last year and taking in more than $1bn for the first time.

Jed Scaramella, senior research analyst at IDC, noted that blades now account for a tenth of all shipments and remain the fastest growing segment of the server market.

"2007 is turning out to be a monumental year for server blades," he said. " The competitive space will become more interesting as vendors continue to roll out new blade initiatives."

HP led the blade charge, taking 42.1 per cent of the market and reporting revenue growth of 79.6 per cent on 2006.

Overall, HP experienced a 10.3 per cent growth in revenues and saw its market share grow to 28.6 per cent, just 1.4 per cent shy of IBM.

Dell, Sun Microsystems and Fujitsu rounded out the top five vendors.