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IDC Reports EMEA Server Revenue Hit Lowest Levels Ever Recorded in the Second Quarter of 2009, as Vendors Await Signs of Recovery in a Changing Environment
"Conditions remain tough because customers have been limiting IT spending to the bare essentials to keep their IT infrastructure running, and this has negatively impacted hardware investment," said Beatriz Valle, IDC analyst for European Systems and Infrastructures Solutions. "Recent industry moves in the form of acquisitions among IT vendors have compounded the overall market uncertainty about changes in the server landscape. IDC sees signs of stabilization this quarter, including modest growth in average selling prices and quasi-flat quarter-on-quarter revenue decline. Virtualization on x86 is seen as the growth engine by server vendors hoping that business will pick up in the traditionally strong fourth quarter. But it will take much longer than that for server revenue in EMEA to go back to the peak of $5.4 billion seen in 4Q07."
This quarter's data confirmed the market trend towards x86 servers, which outperformed non-x86 servers, with 52.3% of the total revenue and a decline of 33% over the year-ago period, compared to the steeper decline of 38.6% for non-x86 systems. Sales of industry standard systems benefited from an upsurge in Western Europe. Volume server revenue reached $ 15 billion and annual declines were less steep than for the midrange and high-end segments, but high-end servers enjoyed a quarterly revival, growing 5.9% in 2Q09 on 1Q09 after very subdued results during the previous quarter.
According to Giorgio Nebuloni, research analyst with IDC European Systems and Infrastructure Solutions, "IDC expects blades to be less impacted by the economic downturn, pushed by increased consolidation needs within budget-constrained companies and by vendors escalating the number of integrated, richly configured solution blocks based on a scalable layer of blade servers, in an attempt to decommoditize the upper end of the x86 business. IDC sees blade growth in the non-x86 segment as well. Factory revenue from non-x86 blades increased by 30.9% annually. Vendors have tried to push blade server adoption in their customer bases whenever energy efficiency, consolidation, or standardization needs were expressed by customers."
"Continuing its downward trend, the Central and Eastern Europe, Middle East, and Africa (CEMA) server market reported year-on-year contractions of 37.5% in revenue and 44.3% in volume. Both the Central and Eastern Europe (CEE) and the Middle East and Africa (MEA) regions are yet to recover from the economic crisis, with both continuing to suffer heavy market declines," said Systems Research Director Stefania Lorenz of IDC CEMA. "In 2Q09, CEE posted 46,000 systems worth $283.45 million, a year-on-year value contraction of 45.6%; not a single country in the server market in this region achieved positive growth."
"The non-x86 server market reported a lesser decline, at 30.8% year on year in revenue, against a fall of 54.6% in the x86 segment. The CEE server market would have fallen even further had it not been for some large previously postponed deals that were fulfilled during the quarter. Despite contracting 28% year on year in value and 29.6% in volume, the MEA server market performed best in the broader region of Europe, Middle East, and Africa (EMEA), accounting for a total value of $316.08 million and 58,000 units in 2Q09. The outlook for the CEMA region as a whole is still gloomy for 3Q09."
- Windows and Linux experienced similar annual declines of around 32%, but Windows was the only main operating system whose market share increased both on the year and on the quarter. Those operating systems running on non-x86 hardware were the worst hit, and Unix revenue was below the $1 billion mark for the second consecutive quarter, and for the second time since records began, with revenue down 38.7% annually.
- Except for x86, every CPU type lost some relative market share in 2Q09 over 2Q08. CISC servers suffering the steepest annual decline, at 41.9%, and RISC systems managing to grow quarterly by 2.1%, but still declining annually by 37%. Sales of EPIC reached $250 million and displayed the biggest quarterly decline of all CPU types, down 8% in 2Q09 on 1Q09. x86 servers declined annually and quarterly by 33% and 1.1%, respectively, with sales totaling $1.5 billion.
- Rack servers were the only form factor to grow quarterly by 1.9% in 2Q09 over 2Q08, and all form factors declined in annual revenue terms, including blades. Blade revenue reached $400 million and declined 12.6% annually, with non-rack server revenue down 44.3% on the year-ago period, probably on the back of the steep mainframe declines. Rack systems therefore became the top revenue-generating form factor, with 44.3% of the total.
- Volume servers were the main market driver, with 53.5% of the total revenue and 97.7% of all the servers shipped in the quarter. Only 7.7% of revenue and 2% of shipments in the volume segment belonged to non-x86 technologies, while for the high-end segment, 98.5% of sales resulted from non-x86 boxes.
- HP was the top server vendor in EMEA for the sixth consecutive quarter, with sales of Proliant servers of around $700 million, 72% of the vendor's revenue, up from a 66.7% share in the same quarter of 2008. The percentage of Integrity revenue in HP's overall business decreased both annually and quarterly.
- IBM continued the transition from the System p family to Power systems, growing its market share 1.4%. Power systems revenue edged towards $400 million and accounted for 41.9% of the vendor's total. But revenue from the mainframe business declined 46.7% annually.
- Sun Microsystems took up the third position and sales of its x86 systems performed well, with both quarterly and annual increases of 23.8% and 5.9%, respectively. The non-x86 SPARC family generated 70.3% of the vendor's total revenue, around $250 million.
- Dell was the only vendor alongside IBM to increase its market share, by nearly a full percentage point, with PowerEdge servers selling around $300 million.
- Fujitsu's x86 family Primergy took 58.3% of the vendor's total revenue, up from the year-ago period following its recent announcement of greater investments in the x86 server business in Western Europe.
IDC's EMEA Quarterly Server Tracker is a quantitative tool for analyzing the server market on a quarterly basis. The tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, country, operating system, price band, CPU type, and architecture. For more information, please contact Nathaniel Martinez on +44 (0) 20 8987 7184 or email firstname.lastname@example.org, contact your local IDC office, or visit www.idc.com.
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