Global server market picks up

The worldwide server systems market has finally seen some growth after nine quarters of decline, although analysts warn that it is too early to talk of a recovery.

IDC's Worldwide Quarterly Server Tracker indicated that server factory revenues for the second quarter crept up to $10.6bn, a 0.2 per cent increase on 2002 and two points ahead of IDC's prediction of a 1.7 per cent decline.

In the first quarter of 2003, factory revenue declined 3.3 per cent year-on-year.

IDC confirmed that unit shipments jumped 17.5 per cent to more than 1.2 million in the period, although average sale prices have continued to slide.

"The fact that this nine-quarter decline in worldwide server revenues has finally come to a halt could signal that IT managers are once again investing in IT infrastructure build-out on a worldwide basis," said Jean Bozman, research vice president of Global Enterprise Server Solutions at IDC.

"Although it is too soon to declare a rebound in the server market, it looks like new IT buying patterns are overtaking old ones."

IDC believes that the improvement has been driven by sales of volume servers, priced at less than $25,000, which were up by more than a fifth.

The analyst suggested that SMEs, departmental-sized groups in enterprises and the steady replacement of servers bought 1999 and 2000, which generated record sales, were behind the increases.

"Rack-optimised servers, and server blades used in clusters and server farms, are increasingly being deployed in the data centre as effective alternatives to larger, Risc-based solutions," said Mark Melenovsky, research director of Global Enterprise Server Solutions at IDC.

"This trend is especially true for internet infrastructure workloads, highly 'parallelised' technical applications and custom applications in the high performance technical computing market, as well as in some vertical markets such as financial services."

IDC said that IBM reclaimed the number one spot in the worldwide server systems market, with a 30.4 per cent share and 10 per cent revenue growth.

Hewlett-Packard, which had gained the top spot in Q1 on the strength of its year-old merger with Compaq, achieved a 27.7 per cent share and flat year-on-year revenue growth.

But HP retained its lead in the Linux server and Windows server market segments. Sun Microsystems, Dell and Fujitsu Siemens filled positions three, four and five respectively.