European server revenues in biggest decline since 2002

6 Mar 2009

European server shipments fell by a fifth in the fourth quarter of 2008, with revenues in the sector totalling US$4.3bn, down 20.6pc year-on-year.

This is the greatest decline in server revenues since the market shrank by 11pc in 2002 in the wake of the dotcom collapse.

“After a weak third quarter, EMEA server market conditions worsened in the fourth quarter of 2008,” said Errol Rasit, senior research analyst at Gartner.

“The fourth quarter marked the first server shipment decline since the second quarter of 2002. Server revenues exhibited the second straight quarter of year-over-year decline.

“Both of these factors highlight the widespread weakness in the server market. Server market declines were not limited to western Europe, both eastern Europe and the Middle East and Africa suffered server volume and revenue declines,” Rasit said.

In the x86 market, total volumes in EMEA declined by 9.5pc, compared to the fourth quarter of 2008.

Each of the top three x86 vendors exhibited volume declines; Hewlett-Packard’s (HP) shipments decreased 5.2pc, Dell dropped 7pc and IBM declined 28.5pc. Dollar exchange rates negatively impacted server pricing, exacerbating the fall in demand.

Of the top 5 x86 vendors, Sun Microsystems was the only vendor to increase x86 units year-over-year, capitalising on migration opportunity. Although Sun’s result is positive, Sun accounted for less than 2pc of x86 market share in the fourth quarter.

In the fourth quarter of 2008, RISC and Itanium Unix revenues declined 24.8pc. Each of the top three vendors in this segment exhibited double-digit revenue declines, although volume declines were not as severe.

This result highlights a weakening in high-end UNIX server sales. The top three RISC and Itanium Unix vendors – HP, Sun and IBM – suffered major year-on-year declines, indicating weakness across most vertical market segments.

By John Kennedy