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EMEA server market struggles to find its footing

Decline in Q4 not as bad as in Q3, at least

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The austerity in Europe over the past several years is taking its toll on the server makers of the world and the companies in the region that most assuredly would love to be spending lots of dough on new software projects and the iron to support it. But they're not – and it's not just Western Europe that's putting a drag on the overall market

According to the latest statistics from IDC, server shipments in Europe, the Middle East, and Africa (EMEA) were collectively down 11.1 per cent in the fourth quarter ended in December, to 569,000 units. Even with a pretty good quarter from Big Blue pushing its new System zEnterprise EC12 mainframes, overall revenues for machines sold in EMEA were off 7.4 per cent to $3.8bn.

As El Reg previously reported, earlier this month, IDC put out its report cards for the server makers for the fourth quarter, and collectively server shipments were down by 3.9 per cent to 2.1 million units, but revenues grew by 3.1 per cent to $14.63bn.

If you do a little math, what you will see is that server sales outside of EMEA actually rose by 7.4 per cent to $10.84bn, and shipments were only off just under a point to 1.53 million machines. So if you want to blame someone about the stagnant state of the server racket, pick your punching bag(s) of choice for the economic woes that many European countries are facing.

I'd blame the banks, since they started it. Thousands of years ago...

"After three quarters of dollar revenue declines of around 11 per cent, the market showed a little stabilization, thanks mostly to a more favorable comparison to 4Q11 and a cyclical rise in mainframe sales," said Giorgio Nebuloni, research manager for the enterprise server group at IDC EMEA, in a statement .

"The picture for the full 2012 was nevertheless negative," Nebuloni said, "with a 10 per cent yearly decline in dollars and -3 per cent in euros. Volumes remained under considerable pressure in 2012, down 7 per cent yearly, as consolidation and macroeconomic factors took their toll. If one compares that to the slower, but still slightly positive growth in compute capacity during the past year, it appears clear that datacenters are really learning how to do more with less."

Modular server shipments, by which IDC means blade servers and density-optimized servers favored by hyperscale web operators, were helped by the 3-petaflops SuperMUC supercomputer installation at Leibniz-Rechenzentrum (LRZ) in Germany plus a number of others. Blade server sales were off 6.3 per cent to $730.5m, while density optimized boxes exploded 79.5 per cent to $107.9m.

IDC said that hosting companies and service providers are boosting their spending in Spain, France, Finland, and the Netherlands, and this helped blade sales in the fourth quarter. Plain-vanilla rack servers accounted for $1.9bn in sales (down 2 points), and tower machines made up just a little over $1bn in revenues (down 20 points).

By architecture, x86-based servers accounted for $2.6bn in sales, but was down 4.9 per cent year-on-year. RISC-based machines, predominantly running a Unix operating system but with some running proprietary OSes, accounted for $496.3m in sales, down 26 per cent, and Itanium-based systems, predominantly running HP-UX Unix but with a smattering of other OSes, accounted for only $120,4m and fell 39.6 per cent. CISC-based machines, dominated by IBM mainframes but including other mainframes from Unisys, Fujitsu, and others, hit $572.9m in sales and rose 17 per cent in Q4.

IDC likes to take a stab at the primary operating system that is installed on a machine once it is fired up in the data center, and part of the revenue figures cited above include a base operating system on it. This sort of thing is a black art, admittedly. But if IDC didn't do it, someone else would have to. IDC reckons that Windows ended up on $1.9bn worth of servers in Q4, down 4.4 percent, and Linux accounted for $719.4m of iron, down 5.5 per cent. Unix-based machines drove $545.6m in revenues, falling 30.6 per cent, and z/OS-based mainframes from IBM grew 16.7 per cent to $486.6m.

For all of 2012, sales of servers in EMEA were off 10.2 per cent to $12.89bn when reckoned in US dollars, as IDC does. Despite IBM having a good fourth quarter thanks to the mainframe bump, HP nonetheless maintained the revenue lead in EMEA for all of 2012, with $4.73bn in revenues (down 14.4 per cent) against Big Blue's $3.79bn (down 11.7 per cent).

Dell, which has been consistently growing sales as the server market weakens, had 2.4 per cent revenue growth in 2012, hitting $1.78bn. Oracle stomached a 24-point hit for the year, bringing in only $758.6m in EMEA, and Fujitsu was able to slow its declines and do better than the market overall after closing out a good fourth quarter where it actually grew 10.2 per cent to $197.7m. For the full year, EMEA accounted for $696.7m in server revenues for Fujitsu. ®

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