Cisco and Fujitsu garner gains as top server vendors struggle

Demand for Unix servers and mainframes declined in Q1, taking IBM, Oracle, HP, and Dell profits down with it

2012 has not been a stellar year thus far for the top server vendors -- IBM, Hewlett-Packard, Dell, and Oracle -- all of whom saw their server shipments and revenue drop year over year, according to Gartner. Demand for RISC- and Intel Itanium-based Unix servers dipped significantly too this past quarter, as did mainframe sales.

But for Cisco Systems and Fujitsu, it's been a different story: Both have managed to garner relatively impressive gains in server sales in what's been an otherwise flat quarter. Cisco has successfully leveraged its data center ties to boost its burgeoning server business, while Fujitsu has benefited from Japan's economic recovery.

Overall, server shipments were up by 1.5 percent this past quarter compared to Q1 2011. But revenues declined for most due to lower revenue per server. In fact, server revenue dipped by 1.8 percent versus a year earlier.

Unit sales of x86-based servers grew 1.7 percent in the first quarter of 2012, and their revenue rose 5.6 percent, according to Gartner. Meanwhile, shipments of blade servers fell 1.3 percent but still garnered 5.6 percent more in revenues for the quarter. Rack-optimized server shipments inched up 0.4 percent in shipments but declined 5.3 percent in revenue for the first quarter of 2012.

What Gartner dubs the "'other CPU category" showed a decline of 16.4 percent in vendor revenue. "This is all down to mainframes, and that market is dominated by IBM," Gartner said. "We predict ongoing long-term decline in revenues with some blips upward -- typically one to two quarters -- as IBM introduces new platforms that create replacement cycles."

Shipments of RISC- and Itanium-based servers declined 5.7 percent, and revenues plunged 15.2 percent in the same period. Jeffrey Hewitt, a research vice president at Gartner, says there are several causes. For starters, Window and Linux continue to gain in functionality and in application workload support, giving organizations an alternative to Unix. Furthermore, the regions where Unix servers have a significant installed base have been held back by a weak economy, Hewitt notes, citing Western Europe and Asia. Also, "Itanium has lost critical [vendor] support for Windows, Linux, and now Oracle," he says.

HP finished the quarter at the top of the heap, at least in terms of overall shipments: 685,000 in all, down from around 687,000 a year ago. This decline was driven primarily by drops in HP's ProLiant and Integrity brands, according to Gartner. For revenue, HP raked in about $3.4 billion for the quarter, down from $3.6 billion in Q1 2011, nearly a 10 percent drop.

IBM, meanwhile, had the highest server revenue for the quarter at $3.5 billion, a drop of 7.2 percent from its revenues of $3.8 billion in Q1 2011. In terms of shipments, however, Big Blue ranked third, shipping about 268,000 servers for the quarter, compared to 272,000 a year ago. Most of IBM's revenue came from its Power Systems brand, according to Gartner.

Dell edged out IBM to claim the No. 2 spot for server shipments of about 503,000, a dip from around 509,000 in Q1 2011. For revenue, Dell ranked third, taking in about $1.9 billion, the same as the year before.

Oracle suffered the second-largest drop in revenue growth year over year: Its server revenue totaled $8 billion in Q1 2011 but fell to $7.4 billion in Q1 2012, a decline of 7.4 percent.

Dell and Fujitsu, by contrast, had cause for celebration this past quarter. Fujitsu shipped about 86,000 servers, a year-over-year increase of 12.7 percent. The company's server revenue, meanwhile, jumped 4.5 percent year over year, from about $592 million to about $618 million. Gartner credited Fujitsu's gains to Japan's ongoing recovery and returning to server spending.

Cisco, meanwhile, increased its server shipments by about 70 percent year over year, from about 24,000 to about 40,000 units. Gartner attributed this to the company's success in leveraging its data center relationships to sell Cisco Unified Communications servers. "I would expect this to continue, but it will become more challenging as time goes on and the upper-tier competition is stiffer," Hewitt says.

This story, "Cisco and Fujitsu garner gains as top server vendors struggle," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow on Twitter.

Copyright © 2012 IDG Communications, Inc.

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