Server biz recovery lags in Europe

The server racket has been recovering in the second quarter, but in Western Europe, spending was affected by faltering economic conditions in some countries and ongoing concern about how all members of the euro zone will be affected.

According to the latest statistics from Gartner, worldwide server spending was up 14.3 per cent, to just a hair over $11bn, with shipments up 27.1 per cent, to 2.15 million units, in the second quarter of 2010. And despite impressive growth in Eastern Europe - shipments up 46.9 per cent and revenues rising 26.2 per cent - Europe as a whole has not yet climbed out of the server spending hole that the economic meltdown eroded in late 2008 and in the first half of 2009.

By Gartner's reckoning, sales of servers across the entire EMEA region were up only 3.7 per cent, to $3.2bn, against shipment growth of 18.4 per cent, to 583,533 units out the door, in the second quarter.

On a worldwide basis, Gartner said that Hewlett-Packard was both the revenue and shipment king of the server hill, with $3.54bn in sales and 644,172 boxes shipped, up 26.7 and 23.3 per cent, respectively. HP is benefiting from a resurgence in x64-based server sales, but as El Reg explained yesterday in its coverage of rival IDC's casing of the server racket, HP's high-end server business is suffering like Big Blue's from product transitions and possibly from some downshifting of server platforms by customers in a tight economy.

While many customers are holding their purchases on mainframes and Unix boxes to await the shipment of new machines, it is likely that at least some of the hesitant shops are holding off moving applications or adding new ones to x64 boxes instead of mainframes or Unix machines. We'll see how it all works out in a few quarters, when we can look back on the data.

Gartner figures IBM is the number two server maker in the world ranked by revenues (for the second quarter in a row), with only $3.06bn in revenues (down 2.7 per cent). But Blue is the number three server shipper, with 267,614 boxes sold in Q2, up 18.1 per cent. While this is good, it brought down the class average among server makers.

Dell ranked second in terms of shippers, with 542,799 shipments in Q2 on a global basis (up 35 per cent), but was the number three player ranked by revenue, far behind IBM with $1.8bn in sales (shooting up 39.5 per cent compared to a pretty awful quarter in the year-ago period). Dell was hit by the economic meltdown a bit harder than others, and mainly because its server product line is a monoculture of x64 machines.

When the housing market and financial services industry tossed the economy into the meat grinder in early 2008, companies were already lining up upgrades for mainframes and big Unix boxes for later in the year and in early 2009, and once those freight train deals get moving, it is hard to stop them. Once they stop, it takes them a while to get moving again, too, which is why it will take IBM and HP some time to get momentum on their biggest boxes.

Oracle was the number three player in Gartner's rankings for the second quarter, with $928.5m in server revenues (down 10.9 per cent), but was fifth by shipments, with only 47,968 machines sold (down 26 per cent). Fujitsu was the fifth-ranked server maker by sales, with $353.6m (up 9.9 per cent), and managed to push out 60,974 boxes (up 24.9 per cent). Other server makers - yeah, there still are a few more left out there - accounted for $1.36bn in sales (up 27.1 per cent, and twice as fast as the market grew overall) and shipments of 581,512 machines (rising faster than the market overall at 37.7 per cent compared to Q2 2009).

The Unix server space, which includes RISC and Itanium servers, continued to slide in Q2, according to Gartner, with revenues down 8.8 per cent worldwide to $2.51bn. All of the Unix vendors - OK, there really are only five to worry about any more - posted revenue declines. IBM was the Unix leader, with $985m in sales (off 8.4 per cent), followed by Oracle with $787.2m (down 12.1 per cent), and HP with $688.5m (down 3.5 per cent). If you are thinking that Fujitsu's numbers are up because it is stealing Sparc/Solaris market share from Oracle, that's not it. Fujitsu's Unix revenues fell 23.2 per cent, to $46.6m. Bull, which resells IBM Power Systems under its own brand, had $31.6m in sales, off 21.6 per cent.

The x64-based portion of the server racket comprised the vast majority of shipments - 2.09 million units - in the second quarter of 2010, which works out to 97.6 per cent. But the x64 platform only accounted for $7.36bn in revenues by Gartner's math, which works out to an even two-thirds of the dough. That last third of the revenue pie really annoys Intel a great deal.

Other server platforms - meaning not x64 boxes and not RISC/Itanium Unix machines - accounted for $1.18bn, down 22.8 per cent.

In the EMEA region, growth was stunted and the transition issues with mainframe and Unix machines seemed to be worse. Unix server sales fell 22.4 percent in EMEA. Gartner did not give out a revenue figure for x64 server sales, but said that shipments were up 19.6 per cent and that revenues were being held up by virtualization and the need for richer configurations to support it.

HP had $1.2bn in server sales in EMEA in the second quarter, rising 21.4 per cent, compared to an 11.8 per cent dive for IBM, to $823.8m. Dell's EMEA server revenues mirrored those in the world at large, rising 34.4 per cent to $402.3m. Oracle's EMEA server biz took it on the chin, dropping 33.9 per cent to $283.2m, and Fujitsu had a slight 8.8 per cent uptick, to $183.5m. All other vendors peddling gear in EMEA added up to $307.2m, up 15.2 per cent and rising four times faster than the market at large. ®