IDC Cuts Second-Quarter Server Forecast

IDC, noting the continued impact of the global economic recession, lowered its forecast for the server market for the second quarter and the year. IDC doesn't expect customer spending to begin growing until 2011, though analysts suggest that the market appears to be nearing the bottom. IDC expects customers to spend $10.6 billion on servers in the second quarter, a 29.6 percent drop over the same period last year.

The global recession is continuing to hammer the IT industry, leading research firm IDC to lower its forecasts for the worldwide server market.

IDC analysts said June 17 that they expect customer spending for servers to drop to $10. 6 billion in the second quarter, a 29.6 percent drop over the same period last year.

Analyst Matt Eastwood said the numbers represent a drop of 8.5 percent-or about $1 billion-over previous IDC forecasts for the quarter, noting that the recession continued to deepen in the first half of 2009.

However, although IDC is predicting a 22.1 percent drop in server revenue for all of 2009, Eastwood said he expects that the market is leaving the worst of the economy troubles behind.

"In fact, by the end of the third quarter this year, nearly 90 percent of the cumulative market contraction will have been realized as the market begins exhibiting significant signs of stabilization," Eastwood said in a statement. "It's important to note that IDC believes many IT users will begin making strategic compute platform decisions during the remainder of 2009 in advance of improving business conditions and server demand in 2010."

That said, it will be a while before overall server spending turns around, and even longer before it reaches the point it was at in 2008, when it reached more than $57 billion. IDC is predicting that will drop to just under $44.5 billion in 2009, and essentially level off in 2010, when spending will be about $44.3 billion.

Spending will begin to grow again in 2011, jumping to $45.5 billion, and will reach $48.5 billion by 2013, according to IDC numbers.

The volume server market-priced at $25,000 or less and hit hardest by the recession-will begin growing in 2010 and reach 2008 levels by 2013. However, the midrange server market-up to $500,000-will level off through 2013, while the high-end server market will continue to see spending declines through that time, dropping from $13 billion in 2008 to $7.1 billion by 2013, according to IDC.

Hewlett-Packard and IBM shared the market-share lead in the first quarter, followed by Dell, Sun Microsystems and Fujitsu.