Server sales dropped sharply in the last quarter of 2008, according to the latest figures from Gartner.
Shipments fell 11.7 per cent in the fourth quarter compared to last year, and revenue declined 15.1 per cent. All regions of the world saw falls in revenue except Japan, which saw a rise of 4.7 per cent.
"The weakening economic environment had a deep impact on server market revenues in the fourth quarter, as companies put a hold on spending across most market segments," said Heeral Kota, a senior research analyst at Gartner.
"Almost all segments exhibited similar behaviour as users sought to reduce costs and spending, deferring projects where possible. Blade servers were one of the few segments to achieve any growth at all in this challenging environment.
"Unix servers, on the other hand, fell for the fourth quarter at 10.5 per cent in shipments and 13.7 per cent in revenue for the year."
Shipments for blade servers were up 30 per cent over the year. HP and IBM dominated the market with over 70 per cent of systems sold between them.
IBM still leads in revenue for the overall server market with just over a third of all sales, followed by HP and Dell. The fifth largest manufacturer, Fujitsu Siemens, had the best quarter, with the lowest fall in sales at nine per cent.
When it comes to shipments HP still leads the server market with 32.3 per cent, followed by Dell with 21.7 per cent and IBM with 13.5 per cent.
"The outlook for 2009 is very challenging, with the pattern of the fourth quarter more indicative for the level of demand in 2009 than that seen in 2008 as a whole," Kota said.
"The continued weak economic environment will cause users to be extremely cautious with levels of expenditure, which will make for a particularly challenging environment for vendors.
"The server market already has high levels of vendor consolidation, but the conditions expected during 2009 will increase the threat of further consolidation."
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