Researcher Says Worldwide Server Market Shows Sharp Rebound in Q4 2009

X86 servers post significant upward spike in revenue and shipments for period.

The worldwide server market generated some $13 billion for the fourth quarter 2009, showing signs of recovery with a second successive quarter-over-quarter upturn, although failing to reverse a sixth consecutive quarterly slide when measured year-over-year, according to researcher International Data Corp.

IDC said that Q4 2009 factory revenue for the worldwide server market slid nearly 4 percent when judged against the same period last year. Global server revenue for the entire year fell nearly 19 percent to $43.2 billion when compared to 2008, IDC said.

IDC’s data on unit shipments of servers for the fourth quarter 2009 also show an improving market.

The researcher figured that for fourth quarter 2009 worldwide server shipments increased by 2 percent when compared with the same quarter last year to 1.9 million units. For the entire year, global server shipments tumbled slightly more than 18 percent to 6.6 million units in comparison to last year’s totals.

For the first time since the third quarter of 2008, factor revenue for volume servers, mid-range servers and high-end systems did not all experience declines in the same period, lending further evidence that a recovery is underway, IDC said.

"Market conditions improved significantly in the fourth quarter as the marketplace transitioned from recent stability to growth in several critical server segments,” said Matt Eastwood, IDC enterprise server group vice president.

IBM Corp. topped the worldwide server market with 35.4 percent of the market, based on factory revenue, for Q4 2009, although its revenue declined 6.5 percent year-over-year.

Hewlett-Packard Co. followed with 30.5 percent of the server market for the quarter, posting a .8 percent boost in revenue compared to the same period last year. Dell Computer Inc. held third place with an 11.5 percent share of the server market revenue for the period. The Austin, TX-based computer maker recorded a 4.5 percent jump in Q4 2009 revenue compared to last year.

Sun Microsystems Inc. showed a 17.3 percent revenue decline year-over-year and an 8 percent share while Fujitsu finished in fifth place with a 4.6 percent revenue share in Q4 2009.

For the year, the leading server vendors all recorded noticeable revenue declines.

While IBM is the 2009 server revenue share leader at 32.9 percent, its worldwide server revenue fell by 16.2 percent year-over-year to $14.2 million.

Similarly, HP held a 29.9 percent share of the worldwide server market for the year based on factory revenue, but experienced an 18.2 percent decline when compared to 2008.

Unstable market could alter server landscape

IDC suggested that evolving market conditions could impact server share going forward.

“Customers are actively re-evaluating their IT needs and refreshing their infrastructures, and the fourth quarter represents the beginning of a market inflection," Eastwood said.

"Optimal conditions for market inflection occur only once a decade and IDC believes that market shares could shift dramatically as the winners and losers of this new market cycle are determined, with those who are best positioned to meet increasingly sophisticated IT needs across the market gaining share," he said.

IDC said that the x86 server market had a significant run up in the fourth quarter 2009, increasing 12.6 percent to $7.3 billion worldwide.

Unit shipments of x86 servers grew by nearly 4 percent globally to 1.9 million servers, IDC said.

In the x86 market, HP is the share leader with 39.3 percent of server factory revenue. Dell retained second place with 20.3 percent revenue share, IDC said.

The researcher said that IBM posted the biggest jump among leading x86 server vendors to command a 19.6 percent revenue share for a 3.5 point year-over-year share gain.

On a worldwide basis, x86 server revenue for 2009 declined 14.6 percent to $23.7 billion, while x86 unit shipments decreased 17.8 percent to 6.4 million units, IDC said.

"In 2009, x86 servers captured more than 55 percent of all server revenue and more than 96 percent of all server units shipped worldwide," said Dan Harrington, an IDC research analyst in the enterprise server group.

"This represents a continuation of the aggressive share gains that x86 technology has enjoyed over the last five years,” he said.

Harrington said that x86 servers captured more than 57 percent of the market in the fourth quarter of 2009, reversing a long standing trend in which non-x86 servers have dominated the market during the year closing period.

“IDC expects this trend to continue as users became more cost conscious than ever in 2010 and look to x86 servers for relief from capital and operational expenditures," he said.

TAGS: server,IBM,HP,x86,IDC

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