Factory revenue and unit shipments for the HPC technical server market exhibited 10% growth in the second quarter (2Q08), according to Jie Wu, IDC research manager for technical computing. Revenues grew 10% over the first quarter and 4% compared to the same period last year, to reach $2.5 billion in the second quarter. Second-quarter 2008 shipments of server system units in the HPC market totaled 45,000, down 5% from the first quarter, while ASPs were up 16% compared to 1Q2008 due to an increase in higher-end system sales and softness in lower priced x86 servers. Wu said the second-quarter 2008 HPC server revenue leaders were HP with 37% market share, IBM with 27%, and Dell with 16%. The HPC portion of the overall server market follows a different pattern due to the nature of spending on R&D projects. This was a strong quarter for the mid and high end of the market as shown by the increase in overall ASP (Average Selling Price). Government and university buyers have longer-term budget cycles that are not immediately impacted by economic slow downs. Economic shifts take over a year to work their way into these budgets. In addition, we are finding that many industrial buyers are still investing in their R&D to try to find ways to be more competitive in the tighter economy. IDC is closely watching the market to see when the broader economic softness impacts HPC spending. "After more than a year of cross-analysis involving IDC's technical computing and enterprise server teams, we found ways to make OEM reporting of HPC server revenue even more consistent and robust," said Vernon Turner, senior vice president of IDC's Enterprise Infrastructure, Consumer, and Telecom research. "Our enhanced methodology has a major impact on better accounting for HPC server, storage, software and service revenues by more accurately separating server revenue from the other HPC revenue categories." Turner said IDC has also enhanced its HPC market tracking to include peak performance and price/performance metrics. The enhancements being incorporated into IDC's HPC tracking methodology include 3 major improvements:

• More consistent and concise tracking of HPC server revenues, by more clearly separating out non-server revenue items like storage, software and services.
• A more robust quarterly validation process, by using both HPC data and IDC's broader enterprise server analysis and data sources.
• In addition, IDC is enhancing its HPC market tracking to include peak performance and price/performance metrics.

"These changes reduce the 2007 overall HPC server market revenues on a pro forma adjusted basis to just over $10 billion. IDC projects that the HPC server market will grow at a compounded annual rate (CAGR) of 9.2% to reach $15.6 billion in 2012. This rate is in line with IDC projections before the recent methodology enhancements. The continued strong growth of this market is being driven primarily by clusters and newer processor technologies," according to Earl Joseph, IDC program vice president for HPC. " "Powered by their price/performance advantage, clusters now dominate all segments of HPC market. In addition, the HPC market is seeing a shift towards fatter nodes as multicore technology becomes pervasive. This is also driving the requirements for larger and faster memories, along with improved interconnection technologies," Joseph said.