IBM, Sun in skirmish over server status
In a battle for bragging rights, IBM and Sun Microsystems Inc. have been publicly bumping heads in recent weeks over which company is dominant in the server marketplace.
The dispute became even more heated two weeks ago when Sun claimed in a press release that "Sun blows past IBM" in total server market revenue. Sun claimed a 45% sales growth rate last year, for the U.S. server market lead. IBM quickly fired back with its own figures, claiming that it actually led the worldwide server market in revenue and outsold Sun by 41%.
Both companies quoted new figures from Stamford, Conn.-based Gartner Group Inc.'s Dataquest unit, but neither provided all of the numbers to tell the full story.
The Story Behind the Numbers
The Dataquest figures showed that Sun actually did have a 45% growth rate from 1999 to 2000 in worldwide server revenue and had higher U.S. market server revenue than IBM in 2000, with $4.78 billion in sales, compared with IBM's $4.69 billion. That was a reversal from 1999, when IBM had $5.2 billion in U.S. sales, compared with Sun's $3.3 billion.
But IBM actually sold more servers in the U.S. in 2000, according to the figures, with IBM selling 239,612 servers vs. Sun's 139,243.
On a worldwide basis, however, IBM beat Sun in both server revenue and units sold, with $13.7 billion in sales and a 25.5% market share, compared with Sun's $9.7 billion in sales and 18.1% share.
Sun spokeswoman Lisa Ganier acknowledged that two Sun executives, Chairman and CEO Scott McNealy and President and Chief Operating Officer Edward Zander, recently made erroneous claims about Sun's worldwide market and revenue gains without having all of the relevant data.
"They were just overzealous in their statements" two weeks ago, Ganier said. "They just got caught up in the moment." McNealy made his comments during several TV interviews, while Zander made similar remarks at a third-quarter update two weeks ago, Ganier said.
"IBM does have revenue leadership worldwide, but in this space, we've taken share from them," she said.
IBM spokesman Mike Fay said his company was "very unhappy" about Zander claiming that Sun is the No. 1 server firm on the planet.
"We are 40% larger than those guys [on a worldwide basis]. "It's not even close," he said.
"These are executives of their company," Fay said. "It's not like some PR person made a mistake."
He added that IBM believes the Dataquest numbers are actually low for its sales and revenue.
Analysts say the rift has deeper roots. Tony Iams, an analyst at D.H. Brown Associates Inc. in Port Chester, N.Y., said Sun has hurt IBM in the commercial server market, where Sun has momentum.
Sun has made progress in recent years by adding acquired technologies, including dynamic reconfiguration, to its servers and by executing good marketing, Iams said.
"This gave them entrance to accounts that they never had access to before, including some that were very dear to IBM," he said. "This is definitely a very heated battle now."