Server Market Continues to Decline in Second Quarter

IDC's Worldwide Quarterly Server Tracker states that factory revenue in the worldwide server market declined by over 30.1% over last year to a total of $9.8 billion for the second quarter of 2009. As Matt Eastwood, group vice president of Enterprise Platforms at IDC, stated, "Over the past four quarters, the worldwide server market has experienced significant revenue deceleration in all geographic regions as the economic recession has deepened."

This is the fourth quarter of revenue decline and the lowest quarterly server revenue since 1996. Server unit shipments fell by 30.4 percent compared to last year, even more so than the year's first quarter decline of 26.5 percent. Revenue for all the server classes dropped in the second quarter, with midrange enterprise revenue falling 28.1 percent and volume system declining 30 percent year over year. The overall slowdown reached the high-end enterprise segment, where revenue declined by 32 percent year over year. This marks the third consecutive quarter in which all server segments experienced a revenue decline when compared to last year.

Matt Eastwood believes that "Fewer servers have been shipped over the past four quarters than at any time since 2005 and it is clear that the worldwide server installed base is aging rapidly. 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."

Overall in server market standings, IBM is still holds number one spot with 34.5 percent market share in factory revenue for Q2 2009. HP still holds the number two spot with a 28.5 percent share of the market, and Dell and Sun now number in on the third and fourth market positions with 10.0 and 12.4 percent, respectively. Dell's factory revenue fell by 26.8 percent and Sun's factory declined by 37.2 percent year over year. Fujitsu/ Fujitsu-Siemens maintained its fifth place with 3.5% market share for Q2.

Non-x86 server revenue declined by 32.2 percent compared to 2008 to a total of $4.7 billion in the second quarter of 2009. This is the first time over the last six quarters that non-x86 machines have underperformed x86 ones in market evolution. Microsoft Windows server revenue totaled at $3.7 billion in the second quarter, a 27.7 percent decline compared to last year. Linux server revenue fell as well, with total revenue of $1.3 billion, a 28.9 percent decline. Unix server revenue dropped by 30.9 percent compared to last year's Q2.

The x86 server market declined by 28.1 percent to $5.2 billion in revenue as the shipment numbers fell to 1.4 million units, a 30 percent regress compared to 2008. This is the lowest x86 server revenue since 2003's Q3. Daniel Harrington, research analyst for Enterprise Server Group, said that the second quarter's performance was not unexpected and that we should note that unit shipment numbers had been increasing. Moreover, the research analyst stated that users could be saving up for the new AMD Istanbul and Intel Nehalem server CPUs.

Total revenue for blade servers fell by 12.1 percent compared to 2008's second quarter. Overall, blade servers, including x86, RISC and EPIC blades, reached a total factory revenue of $1.2 million. Jed Scaramella, senior research analyst at IDC's Datacenter and Enterprise Server group, believes that compared to the overall server market, the blade segment achieved good results for this year's Q2.