IDC's Report

The headline for IDC's press release on the 4Q09 server market sums things up nicely: "Worldwide Server Market Rebounds Sharply in Fourth Quarter as Demand for Blades and x86 Systems Leads the Way."

IDC's Worldwide Quarterly Server Tracker shows factory revenue in the worldwide server market declined 3.9% year over year to $13.0 billion in the fourth quarter of 2009 (4Q09). Despite this sixth consecutive quarter with a year-over-year revenue decline, it was the second consecutive quarter with sequential quarter-over-quarter revenue growth, the survey finds.

For the full year 2009, the IDC survey finds worldwide server revenue declined 18.9% to $43.2 billion when compared to 2008, while worldwide unit shipments declined 18.6% to 6.6 million units.

The particulars for the year show that, on a year-over-year basis, volume systems experienced the sharpest rebound with 9.9% revenue growth. Demand for midrange servers (servers priced $25,000 to $250,000) improved with a year-over-year factory revenue decline of 5.3%. The slowdown extended to the high-end segment where factory revenue declined 23.6% when compared to 4Q08 as several product refresh cycles planned for early 2010 stalled market demand.

IDC notes that this is the first time since 3Q08 that all three server segments have not experienced a year-over-year revenue decline in the same quarter, offering further evidence that a recovery is underway.

According to Matt Eastwood, group VP IDC's Enterprise Servers group, "Market conditions improved significantly in the fourth quarter as the marketplace transitioned from recent stability to growth in several critical server segments. Customers are actively re-evaluating their IT needs and refreshing their infrastructures, and the fourth quarter represents the beginning of a market inflection."

IDC found that, by vendor, IBM held onto the top spot in the worldwide server systems market with 35.4% market share in factory revenue for 4Q09, even though revenue declined 6.5% year over year. Although IBM experienced weakness in its System z mainframe system, IDC notes, demand for x86-based System x servers improved significantly in the quarter.

HP retained its hold on the number two spot with 30.5% share for the quarter as revenue increased 0.8% compared to 4Q08. HP was helped by strength in demand for its x86-based ProLiant servers, IDC notes.

At number three was Dell, which maintained third place with 11.5% factory revenue market share in 4Q09, experiencing a 4.5% revenue growth compared with 4Q08 due to strength in demand from enterprise, public sector, and its datacenter solutions customers.

Sun came in at fourth place with a year-over-year revenue decline of 17.3% in 4Q09 to 8.0% market share while Fujitsu, at number five, experienced a 7.2% increase in factory revenue holding 4.6% revenue share in 4Q09.

Gartner's Report

Gartner, as reported in Information Week by Antone Gonsalves, found that while the worldwide server market recovered in the second half of 2009 from the economic downturn, plummeting sales in high-end systems resulted in a decline in overall revenue in the fourth quarter. Gartner claims that sales of low-end servers in the quarter pushed overall shipments up 4.5% year over year to 2.24 million units while global revenue for the quarter fell 3.2% to $1.49 billion.

A further comment on the server market comes from Andy Patrizio writing in ServerWatch where he reports that orders from the Asia/Pacific region led way in the 4Q09 growth with orders from China and India showing 19.6 percent year-over-year growth. That was followed by the Middle East and Africa, where shipments increased 13.4 percent, and the United States, which rose 9.0 percent, he writes.

The largest decline in orders was from Eastern Europe, which declined 13.3 percent, followed by Canada, which slipped 9.4 percent, and Latin America off 6.8 percent. Western Europe dropped 4.0 percent, and Japan dipped 1.7 percent.

Patrizio characterizes 2009 overall as "awful," writing that " ... the meager gains of the fourth quarter were certainly not enough to counterbalance the hemorrhaging from the prior three quarters. For the year, unit shipments were off 16.6 percent, and revenue fell 18.3 percent. In both cases, Sun Microsystems led the way."

More Information

Server Market Data Signals Rebound - Gonsalves' article [...read more...]

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