Latest figures for the third quarter of 2003 indicate that server revenues rose 1.9% compared to the same quarter last year to $10.8 billion, one percentage point higher than expected. This is the second consecutive quarter of server revenue growth, following nine quarters of decline.

Server shipments shot up by 19.5% compared to the third quarter of 2002, indicating the continued demand for smaller volume servers costing less than $25,000. The figures bore this out, with volume server revenue growing 9.5% on last year.

Meanwhile, sales of midrange servers costing between $25,000 and $499,999 were up by 7%, and revenue from high-end servers ($500,000 and above) fell by 14% compared to last year.

The figures show that IBM Corp [IBM] holds the number-one position in terms of factory revenue however, with $3.4 billion in the quarter, growth of 6.6%, and 31.1% market share.

Hewlett-Packard Co [HPQ] is second with $3 billion in revenue, growth of 3.5% and 27.7% market share. HP’s spin doctors point out that it is number-one when it comes to unit shipments in the quarter, with 30.6%, and that it also can claim to be number-one in Linux, Unix, and Windows server revenues.

Sun Microsystems Inc [SUNW] is third on the overall server revenue chart, with revenue of $1.2 billion, down 9.3%, and 10.8% market share, followed by Dell Corp [DELL] with $1 billion revenue, growth of 11.6%, and 9.5% market share, giving Dell the fastest revenue growth by some considerable margin.

Last of the vendors worth mentioning individually is Fujitsu Ltd [6702q.L] and its European venture Fujitsu Siemens BV, which recorded combined revenue of $684 million, down 2.2%, and market share of 6.3%. Other vendors accounted for $1.6 billion, or 14.7% of the market.

Broken down by operating system, the figures show that Linux continues to rapidly outpace both its rival operating systems and the market as a whole. Over $743 million worth of Linux servers was sold in the quarter, with factory revenue up 49.8% and shipments up 51.4% year-on-year.

In comparison servers running Microsoft Corp’s [MSFT] Windows operating system accounted for $3.4 billion worth of servers sold in the quarter, up 10.3%. Unit shipments for Windows servers were up 21.4%. Unix server revenues were $4.1 billion in the quarter, down 3.8%. While this was the seventh consecutive quarter of Unix server revenue decline, it was also the lowest rate of decline during those seven quarters.

Meanwhile, Unix server shipments actually increased by 4.3% year-on-year, driven by price sweeteners and the move towards smaller servers. Unix specialist Sun lost its cherished position as the number-one Unix server vendor to HP as Sun’s Unix revenue declined by 10.1% despite shipments up 17.4% compared to last year.

HP grabbed 33.8% of the Unix server market in terms of revenue, while Sun recorded 28.4%, and is coming under pressure from IBM, which gained two points of share to 25.6%. Other than the server shipment gains, the figures did not make overly happy reading for Sun, although the company tried to put a brave face on it by highlighting that its focus on entry-level servers had seen it grow revenue in that sector faster than any of its rivals.

This article was based on material originally published by ComputerWire.