virtualization blunts server sales

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Proof, if any more were needed, that virtualization is taking off and delivering on its promise of reducing the number of servers required has been provided by analyst firm IDC. The company's Worldwide Quarterly Server Tracker found that factory revenue declined 24.5% year-on-year in the first quarter of this year. Although some of the blame for this can be placed at the door of the recession, this represents the third successive quarter of year-on-year revenue decline. At US$9.9bn, the quarter also showed the lowest server revenue since IDC began tracking 12 years ago.
Demand slackened across the board with volume systems revenues slipping 30.5%and midrange enterprise demand weakening by 13.6%. The slowdown also reached the high-end enterprise segment, which saw revenues fall by 19.5%. This is the second consecutive quarter and only the second time since 2002 that all three server segments have experienced a year-over-year revenue decline in the same quarter.
Daniel Harrington, a research analyst with IDC reckons that larger enterprises are turning to virtualization, consolidating more workloads per physical server as an alternative to buying new servers. He also reported that most server purchases in the first quarter were made out of necessity, especially by small and medium-sized businesses that needed more server capacity.
Anthony Plewes

After a Masters in Computer Science, I decided that I preferred writing about IT rather than programming. My 20-year writing career has taken me to Hong Kong and London where I've edited and written for IT, business and electronics publications. In 2002 I co-founded Futurity Media with Stewart Baines where I continue to write about a range of topics such as unified communications, cloud computing and enterprise applications.