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x86 systems, Windows Server on the rise

While overall server revenue has been down for the past year, one area that continues to grow is the x86 system market. This is according to the latest IDC Worldwide Quarterly Server Tracker report.

The fact that x86 systems are on the rise is interesting when you take into account the climate of the server market overall. IDC states that while Q4 2009 was down in terms of year-over-year quarterly revenue, it also marked the second straight quarter-to-quarter rise. What’s interesting is that, as the report pointed out, Q4 is traditionally not a golden period for x86 systems. So why is change in the air?

Dan Harrington, a research analyst with IDC’s Enterprise Server Group, put it this way via a company press release:

“This represents a continuation of the aggressive share gains that x86 technology has enjoyed over the last five years. Interestingly, x86 captured more than 57% revenue share in the fourth quarter of 2009. Because the fourth quarter is typically the strongest quarter for high-end non-x86 systems, this represents a significant shift in trends for the market, as non-x86 servers have never held less than 50% of revenue in the fourth quarter. IDC expects this trend to continue as users became more cost conscious than ever in 2010 and look to x86 servers for relief from capital and operational expenditures.”

All the top vendors benefited from this “shift” in the market, as the report states that Hewlett-Packard, Dell and IBM all saw significant x86 growth in Q4. IBM saw the biggest jump, as demand for the company’s x86-based System x servers continues to rise.

Overall, Windows Server hardware was a big winner in Q4, reaching its highest revenue margin in two years (a cool $5.4 billion, making up 41.6% of overall quarterly factory revenue). Harrington told that he expects this trend to continue, due in part to Microsoft’s latest OS releases, saying, “I think Windows Server is going to continue to do well — Microsoft has a strong release with 2008 R2 and Hyper-V bundled in.”

This all sounds like good news for Microsoft in the enterprise, especially considering recent news that Windows 7 is the company’s fastest selling OS ever. Naturally, those numbers are mostly consumer-driven, but as PCWorld reported earlier this week (link above), the company expects businesses to soon follow suit. It’s possible that the combination of 1) XP support coming to an end, 2) the fog of the Vista backlash starting to clear, and 3) Windows 7’s mostly solid reviews could lead to a jump in enterprise deployments this year.

Of course, the other side of this is Microsoft’s other recently released OS, Windows Server 2008 R2, which is the company’s first server operating system that is x64-only. It’s assumed, however, that “x86” in the report refers to x86-64 (x64) systems as well.

As for the other systems out there, Linux servers saw a jump in Q4 as well (though not as significant), coming in at a 6.1% increase year-over-year. They now make up nearly 15% of all server revenue. Unix servers, on the other hand, saw a pretty steep decline of about 18.1% from Q4 2008. This is partly due to the wait for IBM’s Power 7 and Intel’s Itanium processors, and IDC expects those numbers to go up once those products ship.

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