Perhaps Apple chose the wrong time to get out of the server market. The company stopped selling Xserve at the end of January. Now the 2010 server numbers are in, and they’re looking pretty good. Server shipments grew 16.8 percent during 2010 and revenue by 13.2 percent, year over year, according to Gartner. It was a remarkable turnaround compared to 2009, when shipments and revenue fell 16.6 percent and 18.3 percent, respectively. Manufacturers shipped 8.8 million servers for the year, generating $48.8 billion in revenue.

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Gartner largely credited the rebound to x86 server upgrades delayed by the economic crisis set in motion by the September 2008 stock market crash. “2010 was a year that saw pent-up x86-based server demand produce some significant growth on a worldwide level,” Jeffrey Hewitt, Gartner research vice president, said in a statement. “The introduction of new processors from Intel and AMD toward the end of 2009 helped fuel a pretty significant replacement cycle of servers that had been maintained in place during the economic downturn in 2009.”

Blade server revenue rose by 29.5 percent and shipments by 12.6 percent. HP and IBM led shipments, with 47.3 percent and 25.4 percent market share, respectively. In the broader server market, IBM and HP fought for revenue leadership, both topping $15 billion, with 31.4 percent and 30.8 percent share, respectively. However, HP revenue growth more than doubled IBM’s. That said, IBM had much better margins, shipping fewer servers (1.16 million) than HP (2.8 million). HP ended the year at No. 1 in shipments and revenue — 31.7 percent and 31.4 percent, respectively.

Fourth Quarter 2010

On the other hand, perhaps Apple got out of the server market in the nick of time. While Gartner expects server shipments to grow in 2011, the pace will be slower. The analyst firm estimates that the replacement cycle peaked in 2010. Fourth-quarter shipments foreshadow the trend. Shipments grew only by 6.5 percent, although revenue rose a more robust 16.4 percent. Manufacturers shipped 706,202 servers during Q4, generating $4.3 billion in revenue.

Still, the market may not yet have pushed through its growth potential. “We also need to recognize that the market is still in a fairly tentative recovery mode,” Adrian O’Connell, Gartner research director said in a statement. Many companies are still in cost-containment mode and, although 2010 growth levels were strong, we’re still some way off the revenue highs that we saw in 2007.”

Dell and IBM had strongest revenue growth — 26.4 percent — during fourth quarter. Shipments rose 3.8 percent and 6.9 percent respectively. IBM ranked No.1 in revenue share (35.5 percent), while HP lead in shipments (32.1 percent) — another sign of IBM’s higher margins.

Every region brought double-digit growth but Japan, where server shipments declined by 4.4 percent, during Q4. Asia-Pacific: 22.4 percent. EMEA (Europe, Middle East and Africa: 10.4 percent. Latin America: 12.3 percent. North America 24.5 percent. But, again, most of the growth came in x86 servers.

As it typically does, Gartner singled out EMEA, where HP’s huge success is upsetting RISC and Unix server shipments. HP had a colossal 43.6 percent share of server shipments (307,959 units) — or more than the rest of the top-5 combined. “The x86 market is becoming ever more critical to the overall server market,” O’Connell said in the statement, emphasizing that in fourth quarter, x86 revenue accounted for two-thirds of total server revenue.

With x86’s rise came legacy servers’ demise, with RISC and Itanium Unix system revenues falling 19.3 percent year over year. “These weak results are compounded by product transitions but are also indicative of the positioning difficulties that Unix vendors are facing,” O’Connell explained. “The challenge remains for Unix vendors to move upstream and fight for mainframe business, whilst also defending against Windows and Linux encroachments into their own installed bases.”