May 29, 2009

Server Sales Decline Worldwide

Worldwide server sales dropped nearly 25 percent in the first three months of 2009, versus sales from 2008, announced the market research firm IDC.

Global sales totaled $9.9 billion, IDC said, the smallest amount in 12 years. Dell was hurt the worst, with server revenue plummeting 31.2%.

IDC said that although they anticipate the situation to persist, they predict a little recovery by 2010.

"Market conditions worsened in all geographic regions during the first quarter as customers of all types pulled back on both new strategic IT projects and ongoing infrastructure refresh initiatives," Matt Eastwood, IDC's group vice president, said to BBC News.

All three server areas - volume, midrange, and high-end systems - saw a sharp decline. This is the first sales decline since 2002.

The five largest vendors, HP, IBM, Dell, Sun Microsystems and Fujitsu/Fujitsu Siemens, all saw a double digit drop in profits.

Server operating system sales also fell, IDC said. Profits for Unix servers dropped 17.5% contrasting the same period in 2008.

Profits for IBM's System z servers decreased 18.9%. Microsoft Windows server revenues dropped 28.9% and Linux server sales fell 24.8% to $1.4 billion, the smallest amount in five years.

Eastwood noted that companies had halted purchasing new equipment and were concentrating on expanding the years of existing servers.

"While these strategies are effective in the near term, server demand will begin to improve in the second half of the year as customers begin to rebuild their IT capabilities in advance of a meaningful economic recovery in 2010," he said.


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