Weak demand for server market, new data shows

The worldwide server market’s factory revenue declined to $11.9 billion, down 6.2 percent since the same time last year, new data shows, a possible sign of decreasing demand for the computer gear.

This is the second consecutive quarter of server revenue decline year-over-year, according to the International Data Corporation’s Worldwide quarterly server report. Mid-range and high-end server systems showed revenue declines of 22.3 percent and 9.5 percent since last year, according to the report.

Customers “around the world continue to focus on consolidation, virtualization, and migration initiatives aimed at increasing efficiency and lowering datacenter infrastructure costs,” Matt Eastwood, IDC’s general manager and vice president of enterprise platforms said in a statement. “At the same time, challenging economic conditions are dampening demand for new IT projects necessary to grow the server market globally.”

IBM led the global server market, with 27.9 percent market share this quarter, but showed a 10 percent year-over-year decline. HP followed IBM, with 25.9 percent market share, and a 17.5 percent decline. Dell, Oracle and Cisco followed with 18.8, 5.0 and 4.5 percent revenue share, respectively. Dell and Cisco both reached their highest ever market share this quarter, with 10.3 and 42.6 percent revenue growth, respectively, according to IDC.

A Gartner report showed a similar pattern — while worldwide server shipments grew 4 percent year over year, revenue declined 3.8 percent, the report showed.

“Organizations are also considering various kinds of outsourcing,” Jeffrey Hewitt, research vice president at Gartner, said in an interview. “They have more choices than they did before, and they’re looking at things slightly differently. Their purchase cycles are different because of hat.

While Asia and the Pacific region saw a revenue growth of 10 percent and 21.7 in shipment growth, Latin America’s revenue remained almost flat with a 1 percent increase in shipment. Shipments grew in the U.S. by 1.9 percent, but revenue declined by 5.1 percent.

“The global server market remains in a relatively weak state overall,” Hewitt noted in the report.

Mohana Ravindranath covers IT and small business for the Washington Post and its weekly Capital Business publication.
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