This article is more than 1 year old

IBM hit hardest in UK server market bloodbath

Market down by more than a quarter, Big Blue collapses 60%

The tech distribution channel knew the first quarter of 2013 was tough on UK server sales - but until now it was not apparent exactly how bad it was: it was a bloodbath.

And what's more worrying, it isn't going to get markedly better over this year - i.e a return to growth - with analysts forecasting a single digit decline.

Factory revenues for UK sales declined 26.4 per cent, year on year, to $390m in the opening three months of 2013, as all of the major vendors went backwards.

Those reliant on legacy platforms were hit the hardest as RISC, EPIC and CISC server hardware sales declined 71 per cent due to customers accelerating their migration to Intel-powered systems. But even the x86 space - 88 per cent all UK sales - tumbled too, down eight per cent.

There were no hiding places for the vendors, said Giorgio Nebuloni, research manager for servers at IDC, who claimed the rate of drop was even faster than it forecast.

"This was not a growing market," he told The Channel, "HP and IBM had new products on the street so it was not a great performance. Some deals were not closed in the Q1 that will go into Q2".

Market leader HP saw its revenues slide seven per cent on a year ago, mainly due to dropping Itanium shipments.

HP was also engaged in a price war in the volume server space with Dell and that accounted for some of the decline, said the analyst. Dell saw its revenues drop 14 per cent. (IDC refused to provide the exact dollar amount turned over by each vendor in the UK, but it did say HP had the biggest market share, followed by Dell, IBM and Oracle.)

Channel partners told us that IBM UK server sales slumped in Q1 which resulted in a change of leadership, and some cost cutting in the systems technology group.

Nebuloni estimated Big Blue's server turnover dropped by 60 per cent in Q1 as units fell 30 per cent.

"Part of the issue is that IBM did some large deals on Power a year ago that were not repeated [so it was a tough comparison period] but part of it was also related to the way legacy systems sales have been doing generally," he said.

He added that some mid-sized to large enterprises were using more integrated systems and standardising on a single architecture.

Intel's next round of server chips at expected to turn at the end of this year or early 2014, and this was also causing some customers to hold out for the latest tech before refreshing, IDC claimed.

Oracle's ever declining sales situation - it has grown UK server sales in just one of the quarters since acquiring Sun - continued, with factory revenues down 50 per cent.

Nebuloni expects things to pick up in the second half of the year as the economy in the UK and across Europe improves "but we still expect single digit declines this year due to the legacy fall". ®

More about

TIP US OFF

Send us news


Other stories you might like