The worldwide server market hit historic lows in the second quarter as the global economy continued to hammer the technology industry, according to analyst firm IDC. However, the aging of the server population and the introduction of new server processors from Intel and AMD promise an upswing in sales and revenue for the second half of 2009 and into 2010, the analysts said.
The global recession continued to batter the worldwide global market in the
second quarter, but IDC analysts expect
sales to pick up in the coming quarters.
In numbers released Sept. 2, IDC found
that second-quarter global server revenues declined 30 percent-to $9.8
billion-over the same period in 2008, while shipments fell 30.4 percent. The
revenue was the lowest for a quarter since IDC
began tracking the market on a quarterly basis in 1996, and the shipment
decline also was the largest on a year-over-year basis.
It marked the fourth consecutive quarter of revenue decline.
Revenue in all classes-from volume to midrange to high-end systems-fell by
at least 28 percent, and there wasn't a region that didn't feel the slowdown.
In addition, numbers were down for x86 and non-x86 servers alike, with
revenues dropping 28.1 percent and 32.2 percent, respectively.
Doing the best in the server space was the blade market, which saw revenues
drop for the second consecutive quarter, falling 12.1 percent. Shipments
declined 19.8 percent year over year.
However, despite the numbers from the first half of the year, IDC
analysts are expecting the second half of 2009 and 2010 to see revenues and
shipments begin to climb. With their budgets slashed in the wake of the
recession, many IT administrators have been extending the lives of their
systems well beyond their refresh date, according to IDC
analyst Dan Harrington.
In addition, many IT administrators have put off buying new servers until
Intel and Advanced Micro Devices launched their new processors, the quad-core
Xeon 5500 Series "Nehalem
and six-core "Istanbul"
, respectively, Harrington said.
Many businesses decided to delay purchases of systems until servers sporting
the new processors-such as Hewlett-Packard's ProLiant
-hit the market, he said. Such servers promise high performance
with greater energy efficiency and enhanced virtualization capabilities, and
offer a faster return on investment.
"There was a lot of interest [in servers with the new chips]," Harrington
said. "They've put off refreshing [their systems]. ... You can only put off the
refresh cycle for so long, especially when the ROI is so short."
When the buying does start up, he said he expects to see a change in buying
patterns, with businesses being more aggressively in embracing such
technologies as virtualization, which offers greater cost and power savings. A
year ago, a company considering a virtualization project may have decided to put
it off for a while. Now that same company may be more anxious to invest in
"People are more likely to adopt these technologies," Harrington said.
Those technologies and the age of the current servers will fuel the pickup
"These refreshes have to happen sometime," he said. "In some cases, you have
6-year-old servers that can't run the applications out there today."
That will be welcome news to OEMs, which have seen sales fall over the past
few quarters. IBM and HP again were 1 and 2
in the server space, with IBM having a 34.5
percent market share to HP's 28.5 percent.
Dell was in third with a 12.4 percent share, followed by Sun Microsystems at
10 percent and Fujitsu/Fujitsu Siemens at 3.5 percent.