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. ®
COMMENTS
Re: Let's hold it right there!
Well, it is a relative measure, Euro governments are spending far less than they did a few years ago.
I would say Krugman and company are making the opposite of platitudinous arguments. They evaluate each country of their individual circumstances. Greece was just promising more than they could ever hope to deliver and, in their particular case, it was government malfesence and spending run amok. Spain, Ireland, Italy, and the rest of Europe were largely just caught up in a global economic recession which destroyed their revenue base and capital inflows. It is basically a current accounts problem being mistaken for a fiscal problem. For instance, take Spain which everyone is talking about. Prior to the 2008 crisis, they were running government budget surpluses with low debt to GDP. The government was not at fault because of huge spending or anything of that nature. What happened? Well, they had a huge housing/capital bubble brought on by massive inflows of cash from Germany, Britain and the US. When the music stopped, all of that cash, which had increased prices and wages, went away. In classical economic theory, not a problem because wages and prices will magically reset at a lower level to keep full employment and production. As Keynes pointed out years ago, however, that is not what happens in practice. Wages and prices do not drop in half overnight, they are "sticky"... due to contract law, business inertia, etc. It takes years for them to reset to equilibrium where price meets offer. In the mean time, you have mass unemployment, political turmoil, etc.
The Mises institute and the like are dealing in the platitudes, i.e. when you have a debt imbalance, they think the answer is always just cutting and saving. Macroeconomics, however, do not work the same way as your personal checkbook because my spending is your income and your spending is my income. Depressions do not work the same way as normal economic environments because everyone is trying to save and no one is trying to spend. If everyone tries to save and not spend at the same time, everyones' income falls. As peoples/countries' incomes fall, they decide to try to save even more... which causes revenues to decrease even more. It is a vicious circle. It is not intuitive, but it is a pretty simple premise. If we have a bunch of people/organizations that all say, at the same time, we are going to save and not spend, then business activity screeches to a halt (no one is buying, they are trying to save) and they have less incoming revenues from which to save. That is how the Great Depression happened. A huge decline in aggregate demand, which we didn't get out of until a huge government spending project called WWII.... The Mises institute and the rest are just a front for the ultra wealthy's own interests. Think about it. A government goes way into debt to put people back to work building roads or whatever. There are two ways they can cover those costs. 1) Increase taxes on those with money sitting around, not a good thing for the billionaires. 2) "Print money", increase the circulatory base, which will inflate those costs away. If you are a working class person, you are probably not too concerned about your non-existent fortune being inflated away... you would rather have a job. If you are a billionaire, you don't need a job and are very concerned about inflation, even mild inflation. Because of the austerity programs and the global depression, deflation, not inflation, is occurring... which makes all the neverousness over inflation absurd. Of course the right wing says that huge inflation is just around the corner, wait and see, government borrowing rates in the US are going to the moon, wait and see.... we have been waiting for five years, the opposite is happening. The first world countries, the US in particular (which supposed to have large future debt concerns), have never had such low borrowing rates. On a 1 year treasury after inflation, people are actually paying the US government to hold their cash.
The 'V' word
Might the reason actually be virtualisation? With consolidation ratios of 20:1, and even up to 60:1, this must have a impact on physical server deployments.
Let's hold it right there!
"The austerity in Europe"
Been reading too much NYT Krugman and his platitudinal lies, again?
Austerity is nowhere to be seen. Govs are spending, spending, spending.
"First of all, is there really austerity in the eurozone? One would think that a person is austere when she saves, i.e., if she spends less than she earns. Well, there exists not one country in the eurozone that is austere. They all spend more than they receive in revenues. In fact, government deficits are extremely high, at unsustainable levels, as can been seen in the following chart that portrays government deficits in percentage of GDP. Note that the figures for 2012 are what governments wish for...."
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