After two years of contraction the worldwide server market is growing again, according to the latest figures from IDC.

Server sales for the third quarter of 2003 grew by 2 percent compared to the same period a year earlier, said Mark Melenovsky, programme director in IDC's server group. Worldwide server revenue, which includes the costs of server hardware, operating systems and initial storage shipments, reached US$10.8 billion, up from $10.6 billion in the year-ago quarter.

Measured by the number of units shipped, the server market grew by 19.5 percent from a year ago, led by strong sales of servers based on processors from Intel and Advanced Micro Devices, IDC found.

The server market did post a slight gain in the previous quarter, of 0.2 percent, but when it announced its second-quarter figures IDC said it was too early to predict a rebound in the server market, which had just experienced nine consecutive quarters of decline.

IDC's analysts voiced cautious optimism with Wednesdays numbers. "This is a good sign and, I think, a sign that spending for enterprise IT is on a growth target," Melenovsky said. He predicted that the market would grow by 2 percent or 3 percent year-over-year next quarter, and that server sales for 2004 would increase by about five percent over 2003.

IBM retained its lead of the server market, with a 31.1 percent market share on revenue of $3.4 billion. Hewlett-Packard Co. was second, with 27.7 percent on $3 billion in revenue, followed by Sun Microsystems Inc. and Dell Inc., with 10.8 percent and 9.5 percent of the market, on sales of $1.17 billion and $1.03 billion, respectively.

Big Blue extended its lead over HP slightly by posting strong growth in all of its server lines, Melenovsky said. IBM's server revenue grew by 6.6 percent year-over-year, he said.

IBM's pSeries Unix systems did particularly well, bucking an industry trend and growing by 2 percent in a Unix server market that shrunk by 3.8 percent overall. The gains were due in part to a wide-ranging refresh of IBM's pSeries servers, many of which were upgraded to Power4+ processors this year, Melenovsky said.

Sun was the hardest hit by the decline in Unix spending. Its market share dropped by 9.3 percent from the same quarter in 2003.

Strong growth in the Linux market, which grew by 50 percent, took its toll on Sun, Melenovsky said.

Linux systems sold particularly well in high-performance computing clusters as well as the Web infrastructure market, and did not appear to be affected by claims of intellectual property violations in the Linux operating system being made by The SCO Group, he said.

Windows server sales also grew at a respectable pace, increasing by 10 percent from the previous year and slightly exceeding IDC's expectations for the quarter, Melenovsky said. "There are a lot of systems that were bought in 1999 or 2000 that are three or four years old now, and are being replaced," he said.

When measured by the number of units shipped, Windows remained far ahead of Linux, with 841,000 Windows servers shipped in the quarter, compared to 210,000 Linux boxes, Melenovsky said.