Feb 25, 2010 (11:02 AM EST)
Server Market Data Signals Rebound

Read the Original Article at InformationWeek

The latest figures on worldwide server sales from market researcher IDC indicate that businesses are starting to increase spending on their IT infrastructures.

IDC released its market numbers late Wednesday, showing that revenue from servers in the fourth quarter of 2009 declined 3.9% year over year to $13 billion, as shipments rose 1.9% to 1.9 million units. While the results appeared mixed, the numbers behind the numbers painted a brighter picture in regard to business IT spending.

Even though revenue fell year over year for the sixth consecutive quarter, the fourth quarter was the second consecutive period of sequential quarter-over-quarter revenue growth. Driving the increase was a rebound in spending on volume servers, particularly x86 machines. Revenue from volume servers rose 9.9% year over year.

In addition, the revenue decline for mid-range servers, priced $25,000 to $250,000, slowed in the fourth quarter to a 5.3% decline year over year, compared to a 9.5% drop in the third quarter.

"Market conditions improved significantly in the fourth quarter as the marketplace transitioned from recent stability to growth in several critical server segments," IDC analyst Matt Eastwood said in a statement. "Customers are actively re-evaluating their IT needs and refreshing their infrastructures, and the fourth quarter represents the beginning of a market inflection."

The highest end of the server market saw revenue decline 23.6% year over year in the quarter, compared to a 4% increase in the third quarter. IDC attributed the huge drop to companies holding off spending in anticipation of several product refreshes from vendors in the first quarter of this year.

As expected, given the economic recession that led businesses to cut spending much of the year, IDC found that worldwide server revenue for the full year 2009 fell 18.9% from 2008 to $43.2 billion. Worldwide unit shipments declined 18.6% to 6.6 million units.

In looking at the individual vendors in terms of revenue, IBM continued to lead the market in the quarter with a 35.4% share. The company, however, saw revenue decline 6.5% year over year.

Hewlett-Packard held on to the number two spot with a 30.5% share as revenue increased 0.8%. Third-place Dell had a 11.5% share as revenue grew 4.5% due to an increase in sales to enterprise, public sector, and data-center customers, IDC said. Fourth-place Sun Microsystems, which was recently acquired by Oracle, saw a 17.3% decline in revenue to finish the quarter with an 8% share. Rounding out the top five was Fujitsu, which saw a 7.2% increase in revenue to hold a 4.6% revenue share.

IDC released its numbers after rival Gartner issued its fourth-quarter report. The latter analyst firm found a similar trend in revenue and shipments. While global revenue dropped 3.2% to $1.49 billion, shipments rose 4.5% to 2.24 million units, driven mostly by sales of volume servers.

For the full year, worldwide server shipments fell 16.6% from 2008, while revenue declined 18.3%. Gartner predicts a return to shipment growth this year in the middle or high single digits and revenue growth at a slightly lower level.