Discounts drive UK server sales

Heavy discounts have failed to arrest the slide in UK server market revenues, although the decline is no longer as steep.

Over 60,000 server systems were sold for the second consecutive quarter between April and June, an increase of 14.5 per cent year on year compared with the same period for last year.

But the average system value of servers sold in the UK in the three month period was $8,325, 18 per cent below revenues in the second quarter of 2002.

With global and European revenues in other markets having turned the corner, recording their first increases for years, analyst IDC believed that improved unit sales in the UK provided grounds for optimism.

"Despite declining revenues in the UK the overall picture is starting to look brighter as we continue to see the number of servers sold grow over 2002," said Oliver Harcourt, research analyst at IDC's European Server Group.

"Such revenue declines can largely be attributed to increasingly competitive pricing and the continued trend towards lower-priced servers."

Thomas Meyer, manager of IDC's European Server Group, added: "As vendors further decrease prices, capitalising in part on the favourable exchange rate conversions, this has had a severe effect on margins, yet again forcing vendors to revisit their business."

Hewlett Packard (HP) retained its lead in the UK server market, even though revenues fell 22 per cent year-on-year, and IBM enjoyed the strongest growth of the top vendors, with market share rising by 5.2 per cent.

In terms of unit shipments, HP performed best, recording a 16.7 per cent increase, followed by Dell, up 25.6 per cent. IBM and Sun Microsystems both increased market shares slightly.