Server Market Inches Towards Recovery

DQI Bureau
New Update

FY 2009 was a lean year for href="">servers

and in India both href="">

x86 and non-x86 servers

registered a measly growth of just about 4%. One of the biggest

spoilers last year were verticals like IT, BPO and manufacturing going

slow on purchase of new servers. Looking at 2010, the system vendors

are optimistic about a turnaround in the server market and the growth

far better than last year.

The worldwide server market is showing some signs of stabilization.
Reports from IDC and Gartner suggest that 3Q 09 was a good quarter with

sequential growth. According to IDCs 3Q worldwide server tracker, it

said that the worldwide server market declined 17.3% year over year to

$10.4 billion in the third quarter of 2009 (3Q09). Although this is the

fifth consecutive quarter of year-over-year revenue decline, the market

grew sequentially for the first time since 4Q08. Reflecting on this,

IDC analyst Jed Scarmella, said, “It could be that we are

seeing a return to spending faster than we initially thought, or it

could be that purchases got delayed from Q2 into Q3. We think Q1 and Q2

was the bottom of the recession, and we are on a slow, steady recovery."

Server unit shipments declined 17.9% year over year in 3Q09, a
significant improvement over the 30.1% year-over-year decline

experienced in 2Q09, but grew a healthy 12.4% quarter over quarter--the

largest sequential unit growth since 2005. Meanwhile another report by

Gartner said that the server revenues declined by 15 % globally and

stood at $10.7 billion. Despite the decline it was up by 10.2% compared

to the last quarter.

The 3Q 09 trends suggest that the market exceeded expectations and the
x86 server demands are improving as result of infrastructure refresh.

IDC says that the x86 server revenues experienced their largest

sequential quarterly revenue increase in nearly five years. According

to Matt Eastwood, Group Vice President of Enterprise Platforms at IDC:

"We believe that platform migration is once again gaining steam in the

market and the post-recession server deployment patterns will establish

the technology agenda in the data center for the next business cycle.

For server vendors, after five quarters of market contraction, the next

few quarters will be critical to determining the technology platform

winners and losers in the years ahead.”

The turnaround by end of 2009 was echoed by many vendors during DQ Top
20. Most of them are pitching hard on recession-proof verticals like

education and government and are trying to gain more market share and

value. Specifically, on the x86 side, the coming two quarters are going

to be critical for many vendors to reclaim the lost ground in H2 09.