IDC has greatly scaled back its growth predictions for the x86 server market, saying multi-core chips and server virtualisation will reduce demand.

Shipments of servers powered by x86 processors will not grow as fast as previously forecast, but x86 will remain the dominant chip design, IDC said in its latest report.

The research firm blamed the transition to multi-core processors and virtualisation. Both technologies give servers more computing power, thereby reducing demand for new servers.

IDC forecasts that worldwide unit demand for x86 servers will grow by just 39 percent between 2006 and 2010, down from an earlier forecast of 61 percent. This means that IDC has trimmed 4.5 million units and $2.4 billion in revenue from its forecast for 2006 to 2010.

But by no means is the x86 fading away. It is expected to actually grow its unit market share to 94 percent in 2011 from 93 percent in 2006.

"Definitely, the x86 remains the growth engine of the market, but the way customers are spending their money there is shifting," said Michelle Bailey, research vice president for IDC's Enterprise Platforms and Datacenter Trends.

Alternatives to the x86, such as the EPIC architecture in Itanium processors from Intel and HP, the RISC architecture in Sun's Sparc and IBM's Power processors and the CISC architecture in mainframes will remain also-rans.

Based on revenue, the x86 enjoyed 50 percent market share in 2006, Bailey said. By 2011, x86 will grow its revenue market share to 56 percent.

Virtualisation allows a server to run multiple operating systems and applications simultaneously, so a business can run on one server programs it previously would run on, say, four servers. It helps consolidate server deployments by an average ratio of 5:1, said Bailey. And as chip makers develop dual-core or quad-core processors, customers can get even more work out of fewer servers.

"The intersection of the two is what's really having the impact on the market," she said.

The two top server vendors are confident they'll succeed in this shifting market.

"It may reduce the count, but the systems that you do sell become richer configurations because memory has to go up to match the processor capability [and] the input/output has to go up to match the memory and the processor," said Rob Sauerwalt, global business manager for System x servers at IBM.

HP has seen the market shift that IDC identifies over the last four to five months, but "what we're finding is that our volumes are not declining," said Rich Palmer, director of technology strategy for industry standard servers at HP.

IBM held a 38 percent share of the worldwide server market based on revenue in the fourth quarter of 2006, according to IDC, compared to HP's 27 percent. Most of that was from the sale of x86 servers. HP's revenue grew 5.1 percent and IBM's 3.8 percent, during the quarter from the year ago quarter.