Server revenues fell 5.2% year-over-year to $12.6 billion in the third quarter as technology spending slowed around the world, according to market researcher IDC.

The third quarter server revenue decline is estimated to be the largest quarterly revenue decline since Q4 of 2002.

Although server unit shipments grew 2.8% year-over-year, it was the slowest increase in server shipments since the fourth quarter of 2006.

Among the major server vendors, Sun, now in a downward death spiral, showed the sharpest decline with its server revenues down nearly 11% to $1.19 billion.

HP and IBM ended the third quarter in a statistical tie with 30.7% and 30.2% overall market share respectively.

Other highlights of IDC survey:

    *   Windows server revenue fell 5.1% year-over-year to $5.1 billion in 3Q08 but maintained revenue market share at 40.8% of all server revenue
    * Linux servers showed a 2.5% year-over-year revenue decline to $1.8 billion in the quarter. Linux servers account for 14% of all server revenue now
    * Unix servers revenue fell 8.4% with all segments including volume, midrange enterprise and high-end enterprise recording declines. Worldwide Unix revenues were $3.7 billion for Q3, representing 29.7% of quarterly server spending
    * IBM’s System z servers running z/OS witnessed their third consecutive quarter of growth, increasing revenue 24.8% year over year and accounting for 9.4% of all server revenue
    * x86 server revenue declined 6.6% in 3Q08 to $6.9 billion

Blade Servers – Silver Lining
One of the few bright spots in the server market, blade servers factory revenue rose 29.5% year over year to $1.4 billion and represented 11% of all server market revenue in the quarter.

HP maintained the top spot in the blade market with 54.7% market share and quarterly factory revenues growing 55.5% year over year. IBM held the No-2 position in the blade server market with 22.9% share while Dell maintained its No-3 position with 9.3% revenue share.

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