Oracle returns growth to Sun server business

Oracle benefited from a resurgent Unix market to grow its server business for the first time, IDC reports

Oracle logged a small milestone in its Sun acquisition during the first quarter, expanding sales of Sun's server hardware for the first time in three-and-a-half years, IDC reported Tuesday.

Sun's server business was already in decline when Oracle announced plans to buy the company a little over two years ago. Sales plummeted further amid the uncertainty over what CEO Larry Ellison planned to do with the business.

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Oracle has worked hard over the past year to convince customers it will continue to invest in Sun's hardware, and those efforts appear finally to be paying off.

Oracle logged $773 million in server sales during the quarter, up from $681 million the year before, according to IDC's estimates. It's the first time IDC has reported an increase in sales of Sun hardware since the third quarter of 2007, said IDC analyst Matt Eastwood.

Oracle can't take all the credit, however. It rode on the back of a wider recovery in the server market, where overall sales were up 12.1 percent compared to the first quarter of 2010, to $11.9 billion, IDC said.

In particular, IDC noted a recovery in the sales of pricier, high-end servers, including mainframes and Unix systems. That benefitted Oracle, Hewlett-Packard and IBM, all of whom sell high-end servers.

HP remained the world's number-one server vendor by revenue, with its market share staying more or less constant at 31.5 percent. IBM, in the number-two spot, enjoyed the fastest growth and saw its market share expand to 29.2 percent, nipping at HP's heels.

Dell also increased its sales from a year earlier and remained in third place with 15.6 percent market share.

In fact, only Fujitsu did poorly. Its server sales declined almost 16 percent year over year, pushing it from fourth place into fifth, behind Oracle.

Fujitsu's decline could be tied to the massive earthquake and tsunami that devastated Japan in mid-March, Eastwood said. Although the earthquake happened close to the end of the quarter, the last two weeks of March are a time when many sales normally get finalized, he said.

IDC added Cisco Systems to its worldwide server tracker for the first time in the first quarter. Cisco entered the server market in 2009 with its Unified Computing System, which combines servers and network gear in a package.

Cisco took 1.6 percent of server revenue in the first quarter, Eastwood said. It has entered a "sweet spot" in the x86 server market, he said, by selling higher-priced server configurations designed for virtualization projects.

(IDC is a division of International Data Group, the parent company of IDG News Service.)

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