Of the top five global server vendors, the only company that gained revenue share for the year was Sun Microsystems, reversing a yearly revenue share decline trend it has known since 2001, Gartner reports.

Sun has broadened its offerings from its traditional line of SPARC servers in the past 3-4 years, to more low-end boxes, introducing new products in its x64 line to adapt to the changing market, said David Simmons, director of x64 products at Sun.

Sun grew its x64 business to half a billion dollars in fiscal year 2006 – 10.8% of the server vendor revenue share - growing 15.4% over 2005. This growth made Sun the third largest server company in terms of revenue.

The company grew its server shipments 7.8% from 2005, putting it fourth in terms of worldwide shipments in 2006.

How did Sun do this when top dog IBM only grew 1.7% and Hewlett Packard lost 2.3% revenue from 2005? By leveraging third party system designs at the lower end and putting value into them through Sun’s Galaxy line of servers, Simmons said.

“We understand the need for commodity servers. We took industry standards and commodity technology and put it into Galaxy,” said Sun’s Simmons.

Sun’s resurgence in the market is a combination of demand for new products, development of new customers and a major refresh that is occurring in the Sun installed base, said IDC’s Vice President of Enterprise Server Research Matt Eastwood. “Sun’s Installed base is being driven by the aging out of Sun’s base - much of which was installed 7 or 8 years ago,” said Eastwood. “Sun has regained relevance in the market through their product innovation and is once again considered a viable supplier for enterprises, telcos and web 2.0 customers alike.” In 2006, revenue from Sun’s x86 business grew 64% from 2005 and SPARC revenue grew 12%. Sun was particularly successful with volume and midrange products - their historical area of strength - while the high-end was flat, Eastwood said. “Interestingly, Niagra (Sun’s UltraSPARC T1 product) comprised 7% of Sun server revenue for the year…and x86/Galaxy made up 10% of their server revenue in 2006,” Eastwood said.

Sun is making headway in the low-end server market, but is still going after their mid-range and high end customer base.

“We aren’t competing in the cost area. We are adding value by making good, workable (x64) systems that are very data center friendly,” said Simmons. “We are still going after our enterprise accounts.”