IDC and Gartner published bleak figures for the worldwide server market during the second quarter of 2009, as reduced budgets impacted capital expenditure plans, and enterprises instead focused on leveraging the investments that have already been made.
While there has been some optimism that the global economy is positioned to enter a period of recovery, this is not completely reflected in the analyst firms' forecasts for the immediate future. Certainly the appetite for "big ticket" purchases is likely to take longer to recover, due to a shift in corporate mindset towards conservatism that will not go away overnight.
Starting with Gartner, the company said that worldwide server shipments fell 28% year-on-year and server revenue fell 29.4%, indicating that pricing pressure is also evident in this market. x86-based servers were slightly more resilient than RISC/Itanium products, with shipment volume declines of 27.4% and 40.6% respectively.
In terms of geography, demand in EMEA fell most dramatically, with a 31.9% decline in shipments. APAC saw the least downward pressure, with a 17.2% unit decline.
HP led the shipment numbers, followed by Dell, IBM, Sun Microsystems, and Fujitsu/Fujitsu Siemens. All vendors saw double-digit declines, with Sun the most affected, and Fujitsu the most resilient. In terms of revenue, IBM was the top vendor, indicating it is winning more high-value engagements.
According to Errol Rasit, Senior Research Analyst at Gartner: "the second quarter offered no respite to the dire results seen in the first quarter, and showed slightly weaker year-on-year declines, as server spending in all segments remained constrained".
"As economic conditions start to stabilise, the outlook for the third quarter of 2009 is for slightly improved results compared with those seen in the first half of 2009. Even with this relative improvement, we expect server spending behaviour to remain cautious through the second half of 2009, with the market not returning to growth until 2010," he said.
A video of Rasit discussing the market can be found here.
According to IDC, worldwide server shipment volumes fell by 30.5% in Q2, with revenue declining 30.1%. This marks the fourth quarter of revenue decline and "the lowest quarterly server revenue since IDC began tracking the server market on a quarterly basis in 1996". The server unit shipment decline was also the greatest it has recorded, "as customers continued to defer server refresh activities".
The slowdown has affected revenue for all classes of server, with a 30% decline in "volume" systems, a 28.1% drop in the mid-range, and a 32% fall at the high-end. This is the third consecutive quarter where all categories have shrunk.
In terms of vendors, as classified by revenue, IBM held the top spot, ahead of HP, Dell, Sun and Fujitsu/Fujitsu Siemens.
IDC did provide something of a positive for server vendors. Due to the lower spending levels, the installed server base is aging, which means that when the market picks up there will be business to be had. In addition, blade servers have not been as badly affected as other parts of the market.
Matt Eastwood, Group Vice President of Enterprise Platforms at IDC, said: "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".