Lacklustre Q1 performance for servers

25 May 2006

Revenues for the worldwide server market declined 1.9pc year over year in the first quarter reaching US$11.9bn, the latest figures from IDC suggest. This was the second quarterly decline following 10 successive quarters of year-over-year growth.

Worldwide server unit shipment growth slowed modestly to 9.5pc in the first quarter of 2006.

Volume-server revenue grew 6.3pc year over year and although this segment represents the primary growth engine for the overall server market the first quarter of 2006 experienced the slowest growth in this segment in more than three years.
Revenue for mid-range enterprise servers declined 16.2pc year over year for the second consecutive quarter and the high-end enterprise server market showed a 3.2pc decline year over year, making this the sixth consecutive quarter of declining revenue for high-end enterprise servers.

“After three years of consistent growth the server market began to show signs of deceleration in the first quarter,” said Matt Eastwood, program vice-president of Worldwide Server Research at IDC. “Although customers continued to invest in new infrastructure in the quarter, IT spending patterns are evolving and these shifts are clearly having an impact on the server market.

“IDC continues to see IT managers in the data centre working to strategically align the IT organisation with the business. Meanwhile, IT executives are focusing on condensing their IT infrastructure so they can deliver new IT services and enhance existing service levels while holding the line with respect to both IT budgets and staffing levels,” Eastwood said.

Microsoft Windows servers continued to show strong growth as revenues grew 5.9pc and unit shipments grew 12.9pc year over year.

Unix servers experienced a 7.1pc decline in factory revenue year over year while unit shipments declined 8.7pc when compared with the first quarter last year.

Linux servers posted their 15th consecutive quarter of double-digit growth, with year-over-year revenue growth of 17pc and unit shipments up 14.4pc.

Itanium-based systems grew 41.8pc year over year, representing 11.2pc of all non-x86 server revenue.

HP and IBM tied for the number one market position with 28.1pc and 27.9pc share respectively. Dell maintained third place with 11.1pc market share. Sun increased its market share to 10.8pc form 10pc last year. Fujitsu-Siemens maintained a fifth place standing with 6.9pc market share in the quarter.

By John Kennedy