While the worldwide server market’s factory revenue grew 6.4% over the last year, according to the IDC’s Worldwide Quarterly Server Track, Linux server revenue was running ahead of the curve at a growth rate of 10%.

The economy may be tanking, but the worldwide server market still did $13.9-billion worth of business in 2008’s second quarter, making it the best second quarter since 2000. What’s diving this are businesses replacing older servers and adding new enterprise, SMB, and cloud computing servers. Curiously, considering the overall bad financial news it’s the high-end enterprise server market that’s leading the way with a 22.1% increase year over year.

“The refresh cycle we’re currently seeing in the midrange and high-end segments is part of the IT transformation cycle that is continuing as older, scalable systems (with 4 sockets, 8 sockets, or more) are being replaced, either by new scale-up servers or by groups of scale-out servers,” said Jean S. Bozman, research vice president in the Enterprise Platforms Group in a statement. “The growth in midrange and high-end servers this quarter shows that customers still see value in leveraging these scalable servers, with built-in high availability and RAS (Remote Access Services) features, for some of their most mission-critical workloads and for workload consolidation.”

Leading the way in terms of growth was, believe it or not, the mainframe. IBM’s System z servers running z/OS experienced the second consecutive quarter of positive revenue growth, with 31.7% year-over-year growth in 2Q08 to $1.6 billion. What IDC doesn’t say though is that on top of many, if not most, of those z series mainframes with z/OS you’ll find Linux. According to IBM, “ more than 390 IBM business partners now offer nearly 1,000 applications for System z customers running Linux, a 100 percent increase over the last year. IBM [also] recently reported a 30 percent year-to-year growth of mainframe customers running Linux.”

Next, in terms of growth was Linux with its year-over-year revenue growth of 10%. Altogether through brought Linux server revenue up to $1.9 billion for the quarter. All-together, Linux servers now represent 13.4% of all server revenue, up from 9.4% a year ago. It should also be noted though that IDC is measuring Linux server ‘revenues.’ So, while IDC counts RHEL (Red Hat Enterprise Linux) and SLES (SUSE Linux Enterprise Server), the IDC survey takes no account of businesses that are using community Linux distributions like Debian, Ubuntu or openSUSE.

Unix, despite Linux’s in-roads, is still holding its own with a year-over-year revenue growth of 7.7% and worldwide Unix revenue servers totaled $4.6-billion and held on to 32.7% of server market spending. Here, the high-end enterprise segment turned in the best results.

You might think from that news that Sun must be doing well. You’d be wrong. Sun, which came in fourth, after IBM, HP, and Dell in that order, saw its revenue decline by 7.2% year over year. It would seem that IBM, with its System p servers running AIX, and HP with its Integrity servers running HP/UX, not Sun with its SPARC servers running Solaris, are the ones winning the high-end Unix customers.

Specifically, “IBM regained the top spot in Unix market share on the strength of its Power-based System p and merged Power Systems families, growing revenue nearly 25.7% in the quarter and gaining 5.1% points in year-over-year comparisons,” said Steve Josselyn, IDC’s research director for Enterprise Platforms in a press release. “Sun took second position with 31.1% share, posting a drop of 5.6% points from a year ago, and HP rounds out the top three with 25.8% share and a gain of 1%.”

Number one in the market , but at the bottom of the barrel in terms of growth, is Microsoft. While Windows Server, with $5.1-billion in the last quarter had 36.5% of all server revenue, its year over year growth was a laggard 1.7% year-over-year growth.

Looking ahead, Linux’s future in the server market is looking brighter than ever. It’s growth rate, especially when you consider that z/OS’ growth is tied directly to Linux, is great and its competition on the commodity x86 server market. Windows, has essentially stalled out. It’s no wonder that Microsoft and Novell has expanded their partnership. Microsoft is going to need Linux interoperability in the years to come to try to hang on to its number one position.