Server sales slump amid crisis

 

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By Stewart Mitchell

Posted on 26 Feb 2009 at 11:49

Worldwide server sales plunged in the last quarter of 2008 as corporate buyers tightened their purse strings, says research firm IDC.

According to the company's Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market declined 14% year-over-year to US$13.5 billion (£9.5 billion) in the fourth quarter of 2008, marking the second consecutive quarter of market decline.

"The server market experienced its sharpest decline since the middle of the dot-com slowdown nearly seven years ago," says Matthew Eastwood, group vice president of IDC's Enterprise Platforms Group. "All server vendors, geographies, and technology segments were impacted significantly as the global recession gained momentum and market conditions weakened as the quarter progressed."

Worldwide server unit shipments declined 12% in the fourth quarter and annual worldwide server revenue declined 3.3% to $53.3 billion. However, annual worldwide unit shipments grew 2% to 8.1 million units highlighting widespread price cutting.

The bad news for vendors is that IDC sees no quick fix to the market as the global economic crisis continues.

"It now appears the slowdown will worsen before any improvement is seen in late 2009 or early 2010," says Eastwood. "In the near term, IT customers will increasingly look for IT optimisation projects with strong ROI potential and extend virtualisation, consolidation, and migration programs in order to lower capital and operational costs while improving efficiencies."

According to IDC. Microsoft Windows server demand was hit by the slowing x86 market as hardware revenue declined 18% and unit shipments declined 10% year over year. Unix servers, meanwhile saw a 6.2% decline, while Linux fell 7%.

"While Unix server revenue declined in the fourth quarter, Unix server share compares well with the year-ago quarter," says Jean Bozman, research vice president, IDC Enterprise Platforms Group. "So, while actual revenue was lower this time around, the share of total revenue shows continued investment in Unix servers, where customers have invested so deeply over the years to support mission-critical workloads."