Framingham (MA) – As the global server market showed negative growth in the first quarter of this year, AMD continued its successful run and was able to expand its worldwide market share in the x86 market to 17% and more than 25% in the US, according to reports released today. Intel’s has been hit once again and will need a speedy release and ramp of its Woodcrest processor to slow AMD’s pace.
The overall server market saw a dramatic seasonal adjustment in the first quarter. Revenues plunged more than 18% from $14.48 billion down to $11.85 billion in Q1 2006. Even if compared to the first quarter of 2005, the market was very soft, considering a 1.9% revenue decline from slightly more than $11.9 billion. Worldwide server unit shipments growth also slowed modestly to 9.5 year-over-year.
But there are pockets of growth and it is especially the x86 server market that keeps the server industry exciting and challenging for component manufacturers and system builders. According to IDC, it was AMD that was able to gain ground on Intel. The research firm said that AMD’s global market share reached 16.7% in Q1, up from 10.9% in Q4 2005 and up from 4.9% in Q4 2004. Gartner mentioned that AMD was even more successful in the US, where the firm was able to capture a 25.7% share, up from 20.8% sequentially and up from 9.0% year-over-year.
IDC analyst Matt Eastwood told TG Daily that revenue shares of AMD-based servers jumped 154% from Q1 2005 and 10.7% from Q4 2005. In comparison, Intel lost about 5% of revenues in the x86 market over the year and 12.7% sequentially. The most recent quarter was also the very first time that AMD x86 servers accounted for more than $1 billion of sales of the total $6.1 billion market.
Eastwood called the impact on Intel as “significant,” while he believes that AMD’s gains will begin to slow once Intel will begin rolling out its Xeon 5100-series with Woodcrest core in the third quarter of this year. According to Eastwood, AMD’s success has mainly been in the four-socket server segment and hit Intel especially on a margin basis. As AMD is pushing into the two-socket segment, Intel will see a greater impact on volume as well, Eastwood believes. The time runs for AMD and against Intel – the sooner Intel will be able to bring Woodcrest to market, the more damage can be avoided as it seems.
AMD’s success also had a positive impact on Sun Microsystems, a company that has been struggling to get traction in the server market again. Sun was able to almost double its x86 revenues over the year. “Dell, HP, Fujitsu/FSC and Sun all posted positive year-over-year revenue growth in the x86 server market,” IDC said. “However, IBM and Sun were the only top 5 server vendors to outgrow the market in Q1 06 – growing factory revenue 11.2% and 84.3% respectively – and gaining x86 market share in the process. HP led the market with 32.3% revenue share and Dell maintained the second place with 21.6% revenue share.”
The attention Opteron received in recent months may also have been the key driver that led Dell to adopt the Opteron processor, Eastwood said. However, he believes that Dell warmed up to the Opteron mainly to please the financial community and will be playing the game both ways: “Intel will have an opportunity to win the business back. Dell will give them a chance to do just that,” he told TG Daily.
In other server market trends, Microsoft Windows servers continued to show strong growth as revenues grew 5.9% and unit shipments grew 12.9% year over year. Quarterly factory revenue of $4.4 billion for Windows servers represented the largest single segment of the server market.
Linux servers posted their fifteenth consecutive quarter of double-digit growth, with year-over-year revenue growth of 17.0% and unit shipments up 14.4%. Although Linux servers now represent 12.2% of all server revenue, revenue growth for the quarter was approximately half the growth rate observed in Q1 2005, IDC said. Unix servers experienced a 7.1% decline in factory revenue year over year, while unit shipments declined 8.7% when compared with 1Q05. Worldwide Unix revenues of more than $3.9 billion for the quarter and represented a still substantial 33.2% of overall quarterly factory revenue.
On a vendor basis, HP and IBM tied for the number one position with 28.1% and 27.9% share respectively, with IBM loosing 0.5 points of share and HP gaining 0.4 points of share. Dell maintained third place with 11.1% market share. Sun came in with a 5.8% year-over-year revenue growth in Q1 and increased its overall market share to 10.8%, up from 10.0% last year.
AMD more than doubles Opteron shipments in slowing server market