Feeds

Server sales cratered in Q4, says IDC

Blades the only bright spot

Boost IT visibility and business value

Someone has turned the volume knob on the x64 server market from 11 down to 9. And that someone is the economic meltdown.

In the fourth quarter of 2008, when the meltdown was flaring up, server spending dropped off dramatically. The analysts at IDC who track the server space reckon that server sales contracted "sharply" in Q4, falling 14 per cent to $13.5bn, with shipments dropping by 12 per cent.

Those declines might not be as severe as the ones we have all seen in our retirement funds in recent months, but for the tectonically moving server space, where change comes in small increments, this is akin to an earthquake like we haven't seen since the dot-com bust. And it looks like it can - and likely will - get worse.

"The server market experienced its sharpest decline since the middle of the dot-com slowdown nearly seven years ago," confirmed said Matthew Eastwood, group vice president of IDC's enterprise platforms group, which puts together the server stats each quarter.

"All server vendors, geographies, and technology segments were impacted significantly as the global recession gained momentum and market conditions weakened as the quarter progressed. It now appears the slowdown will worsen before any improvement is seen in late 2009 or early 2010.

"In the near term, IT customers will increasingly look for IT optimization projects with strong ROI potential and extend virtualization, consolidation, and migration programs in order to lower capital and operational costs while improving efficiencies."

The economic meltdown was still heating up in the third quarter, as we previously reported, with server makers pulling in $12.6bn in sales, down 5.2 per cent and representing the largest quarterly decline since the fourth quarter of 2002. Shipments in Q3 fell by 2.8 per cent, the worst decline since the final quarter of 2006. Well, until the fourth quarter of 2008 came along.

The so-called volume server segment, where machines cost less than $25,000, saw the biggest revenue decline in Q4, with sales off 16.8 per cent. Enterprise-class machines, which cost $250,000 or more, had a less dramatic decline, only dropping 7.5 per cent compared to the final quarter of 2007. The midrange segment, which is for machines that cost more than $25,000 but less than $250,000, had a 14.5 per cent revenue decline.

It is noteworthy that this is the first time since 2002 that all three segments have declined. As high-end and midrange machines took it on the chin during the last recession early this decade, the volume segment - dominated by x86 machines - picked up the slack as companies cut costs and transitioned whatever workloads they could from proprietary and Unix boxes to x86 machines running Windows and sometimes Linux. This time around, Windows took the big hit.

The essential guide to IT transformation

Next page: How Big?

More from The Register

next story
The Return of BSOD: Does ANYONE trust Microsoft patches?
Sysadmins, you're either fighting fires or seen as incompetents now
Microsoft: Azure isn't ready for biz-critical apps … yet
Microsoft will move its own IT to the cloud to avoid $200m server bill
Oracle reveals 32-core, 10 BEEELLION-transistor SPARC M7
New chip scales to 1024 cores, 8192 threads 64 TB RAM, at speeds over 3.6GHz
Docker kicks KVM's butt in IBM tests
Big Blue finds containers are speedy, but may not have much room to improve
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
Gartner's Special Report: Should you believe the hype?
Enough hot air to carry a balloon to the Moon
Flash could be CHEAPER than SAS DISK? Come off it, NetApp
Stats analysis reckons we'll hit that point in just three years
Dell The Man shrieks: 'We've got a Bitcoin order, we've got a Bitcoin order'
$50k of PowerEdge servers? That'll be 85 coins in digi-dosh
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.