Sun burned brighter than server rivals last year

Sun Microsystems, bruised by years of trying to recover from the dot-com bust, saw revenue gains that beat server rivals in 2006, according to new figures.

The server company was the only one in the top five for the niche to have revenue growth that exceeded that of the overall server market, which registered a two per cent rise last year, according to statistics from Gartner Group.

Sun's revenue increased 15.4 per cent to $5.4bn in 2006, reversing the market share losses it has suffered every year since 2001. That total means it has now clawed its way back into third place in servers, over Dell. For 2006, Sun had 10.8 per cent of the total market, to Dell's 10.3 per cent; Dell's revenue increased 0.4 per cent to $5.4bn.

Overall, the worldwide server market grew two per cent to $52.7bn last year, Gartner said. Unit shipments of servers rose 8.9 per cent to 8.2 million.

IBM remained king of the heap, with 1.7 per cent growth to $16.9bn in sales. Number two HP shrank 2.3 per cent to $14.2bn. At number five, the combination of Fujitsu and Fujitsu-Siemens dropped seven per cent to $2.5bn.

Sun posted a strong fourth quarter in 2006, with growth in sales of both x86 and Sparc servers.

Servers using x86 processors, such as Intel's Xeon and AMD's Opteron, have been a strong growth segment for years. But they lost momentum in the fourth quarter of 2006, Gartner analyst Jeffrey Hewitt said in a statement.

He attributed the change to slowed purchases from customers, who were anticipating new models with quad-core processors. He also put it down to the effect of virtualisation, which allows customers to replace multiple servers with a single server, running multiple operating systems in separate partitions called virtual machines.

HP retained its leadership in shipping the most units - 2.3 million, well ahead of Dell at 1.7 million and IBM at 1.3 million.

Stephen Shankland writes for CNET News.com