SAN FRANCISCO (Dow Jones) - Factory revenue in the worldwide server market grew 8.1% to $12.5 billion in the third quarter, with IBM and Hewlett-Packard remaining the industry leaders, according to a report Wednesday from technology research firm IDC.

IBM (IBM) again claimed the top spot in the server market with factory revenue of $4.03 billion worldwide, up 10.3% from the third quarter of last year. IBM's market share rose slightly to 32.3%.

Hewlett-Packard Co. (HPQ) remained in second place with a 27.8% market share and factory revenue that surged 12.4% from last year to $3.47 billion .

Rounding out the top five were Dell Inc. (DELL), Sun Microsystems Inc. (SUNW) and Fujitsu /Fujitsu-Siemens.

In terms of unit shipments, H-P remained in the number 1 position with a 28.8% market share. H-P's shipments grew 6.4% from a year ago. Dell was second with a 23.9% market share.

Volume server revenue industry-wide grew 14.8% from the year-ago period and continues to be the primary growth engine for the market, IDC said. Volume servers are those priced less than $25,000 .

Revenue for midrange enterprise servers - priced at $25,000 to $499,999 - grew 3.8%, while the high-end enterprise server market - those with prices of $500 , 000 and up - fell 1.2%.

The strength in the volume and midrange enterprise server segments shows "IT purchasers' continuing focus on cost containment," Matt Eastwood, IDC's program vice president of worldwide server research, said in a note.

Demand for x86 servers surged, with revenue rising 16% from last year to $6.3 billion worldwide.

Unix servers, meanwhile, saw a 0.4% decline in factory revenue, to $3.9 billion, while unit shipments fell 13.7% from a year ago.

(END) Dow Jones Newswires

11-23-05 0529ET Copyright (c) 2005 Dow Jones & Company, Inc. Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved.