IDC, Gartner Agree: Server Sales Continue To Plummet

Both IDC and Gartner said on Tuesday that the server market continued shrinking in the second quarter of 2009. But the news was not all bad as IDC said the market is starting to show signs of stabilization and Gartner said average selling prices are rising.

IDC estimated that worldwide server shipments in the second quarter plummeted year-over-year by 30.4 percent, while worldwide revenue dropped by 30.1 percent to $9.8 billion, which is the lowest revenue since the research firm began tracking quarterly server sales in 1996.

Gartner, meanwhile, said worldwide server shipments dropped during the same period an estimated 28 percent to 1.7 million units, while revenue dropped 29.4 percent to $9.7 billion.

Both firms said IBM held on to its No. 1 position in terms of server revenue for the second quarter, with IDC crediting IBM with sales of $3.4 billion, down 26.3 percent compared to last year, and Gartner crediting IBM with sales of $3.1 billion, down 27.1 percent.

In both research reports, Hewlett-Packard was the No. 2 server vendor in terms of sales, followed by Dell, Sun Microsystems and Fujitsu/Fujitsu Siemens.

Of all the major vendors, Sun seems to have fared the worst. Both IDC and Gartner said Sun's server revenue dropped the fastest of the top five vendors, with IDC estimating a drop of 37.2 percent compared to Gartner's estimate of 36.2 percent.

Gartner further estimated that HP was the leading vendor in terms of server shipments thanks to sales of 522,447 units in the second quarter, down 26.1 percent compared to last year. Dell was second with shipments of 402,187 units, down 30.3 percent. IBM shipped 226,570 units, down 26.6 percent from last year. Sun's shipments fell 34.3 percent to 63,412 units. And shipments from Fujitsu/Fujitsu Siemens fell 20.1 percent to 48,819 units.

While sales of x86-based servers have been falling faster than sales of non-x86-based servers in the last few quarters, that is changing, both IDC and Gartner said.

IDC also estimated that sales of Windows-based servers fell 27.7 percent year-over-year, compared to a decline of 28.9 percent for Linux-based servers and a drop of 30.9 percent for Unix-based servers.

One relatively bright spot in server sales, according to IDC, was the blade server market, where shipments fell year-over-year by 19.8 percent, leading to a drop in revenue of 12.1 percent. This was significantly better than IDC's estimated 30.4 percent drop in total server shipments and 30.1 percent drop in total revenue.

HP continued to lead the blade server market with a 52.9 percent share in terms of revenue, followed by IBM with a 27.2 percent share and Dell with a 9.1 percent share, IDC estimated. However, IBM grew its share by 3.8 points thanks to a 2.3 percent growth in revenue compared to last year, IDC said.

Gartner also called blade servers the best-performing part of the server market. It estimated total x86-based blade server shipments fell 23.6 percent over last year, leading to a drop in total revenue of 13.6 percent.

In another bright spot, Gartner estimated that the average selling price of servers from three of the top five vendors actually rose, compared to last year.

Overall average server prices rose 2.3 percent to $3,323 in the second quarter of 2009 compared to last year, according to Gartner. The rise in average selling price was led by Dell, which saw an increase of 14.3 percent to $3,215, followed by a 7.1 percent increase in IBM server prices and a 1.9 percent increase in Sun's prices.

In a statement, Matt Eastwood, group vice president of enterprise platforms at IDC, wrote that IDC sees signs the server market is starting to stabilize.

"In the weeks and months ahead, IDC believes that IT customers around the globe will begin to focus on the future once again, making strategic compute platform decisions for the next business cycle, and driving more predictable server demand as market conditions stabilize in the second half of 2009," Eastwood wrote.

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