Has the Server Market Hit Bottom?

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Has the Server Market Hit Bottom?

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Has the Server Market Hit Bottom?
- By: Rich Miller
  September 2nd, 2009
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IDC has released its latest update on server sales, showing continued sales declines in the second quarter of 2009. The research firm’s Quarterly Server Tracker found that revenue from global server sales declined 30.1% year over year to $9.8 billion, the fourth consecutive quarter of revenue decline and the lowest quarterly server revenue since IDC began tracking the server market on a quarterly basis in 1996.

“Over the past four quarters, the worldwide server market has experienced significant revenue deceleration in all geographic regions as the economic recession has deepened,” said Matt Eastwood, group vice president of Enterprise Platforms at IDC. “Fewer servers have been shipped over the past four quarters than at any time since 2005 and it is clear that the worldwide server installed base is aging rapidly.”

So is there any good news? Maybe, says IDC. Here are some highlights:

Blade servers fared better than other sectors: ”Compared to the overall server market, the blade segment experienced relatively good results for the quarter,” said Jed Scaramella, senior research analyst in IDC’s Datacenter and Enterprise Server group. “The converge nature of the blade platform enables IT organizations to increase IT efficiency through improving manageability and lowering operating expenses. These are key customer criteria during the current economic recession.”

The x86 server market remained weak: ”IDC believes that due to constrained IT budgets, users refrained from investing what capital they had in preparation for the significant product refresh led by the latest AMD Istanbul and Intel Nehalem server CPU’s, which began ramping during the quarter.said Daniel Harrington, research analyst, Enterprise Server Group. ” Indications from the market support an optimistic view for x86 in the coming quarters.”

The bottom may be near: “In the weeks and months ahead, IDC believes that IT customers around the globe will begin to focus on the future once again, making strategic compute platform decisions for the next business cycle, and driving more predictable server demand as market conditions stabilize in the second half of 2009,” said Eastwood.

See IDC’s full press release for sector-by-sector details details of second quarter server activity.

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Scott Handy

Posted September 2nd, 2009

Great post. With regard to your comment about how customers might focus their IT decisions going forward – I think you’re right. Companies – at least the ones I speak with – aren’t just waiting around for budget relief to update existing IT infrastructures. They’re planning ahead with a sharp eye toward using IT more flexibly, and increasingly in the name of building their competitiveness. They are hungry to grow and know that IT can play a new role – if only it can be optimized for new types of work and new ways to be shared across the company. I think this shift explains a lot about why IBM is gaining share into this tightened market. It’s about more than break/fix – and it takes more than a one-size-fits-all view of IT to deliver it. We think customers are looking for more automated and intelligent systems — i.e. bring more automation and intelligence into managing processes, assets, energy, etc. inside and outside the data center. A strategy that goes well beyond just virtualization. So as I’m performing home chores this weekend, I feel good that the IDC numbers show IBM has momentum as the market stabilizes and then grows.