Server Sales, Shipments Slump In Q4: Report

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Worldwide server revenue decreased 15.1 percent in the fourth quarter of 2008 compared to the same quarter in 2007, while server shipments dropped 11.7 percent, Gartner said.

"The weakening economic environment had a deep impact on server market revenues in the fourth quarter as companies put a hold on spending across most market segments," said Heeral Kota, a senior research analyst at Gartner. "Almost all segments exhibited similar behavior as users sought to reduce costs and spending, deferring projects where possible. Blade servers were one of the few segments to achieve any growth at all in this challenging environment."

For 2009, the market is not expected to improve, Gartner said.

"The outlook for 2009 is a very challenging one, with the pattern of the fourth quarter more indicative for the level of demand in 2009 than that seen in 2008 as a whole," Kota said. "The continued weak economic environment will cause users to be extremely cautious with levels of expenditure which will make for a particularly challenging environment for vendors. The server market already has high levels of vendor consolidation but the conditions expected during 2009 will increase the threat of further consolidation."

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In the fourth quarter of 2008, North America server revenue fell by 14.6 percent, with the worst decline experienced by Europe, Middle East, and Africa (EMEA), with revenue falling by 20.6 percent. Latin America and Asia/Pacific suffered with declines of 12.5 percent and 14.8 percent, respectively. Japan had a 4.7 perdent revenue increase.

The leading server vendors all saw a decline in revenue in the fourth quarter of 2008.

IBM retained the top spot in the quarter in server revenue with $4.83 billion, down from $5.31 billion in revenue the same quarter of 2007, a drop of 17.4 percent, and its market share dropped from 34.4 percent to 33.4 percent.

Hewlett-Packard followed with revenue of $3.93 billion for the quarter, down from $4.37 billion in the year before period, a 10 percent drop. Its market share rose to 30 percent from 28.3 percent.

Third place Dell's revenue was $1.4 billion, down 11.2 percent from $1.58 billion the year before. Its market share rose to 10.7 percent from 10.2 percent.

Sun's revenue was $1.25 billion, down 14.9 percent from $1.47 billion, with market share remaining at 9.6 percent.

Fujitsu/Fujitsu Siemens saw $560 million in revenue, down from $615 million the year before, a 9 percent drop. Its market share was 4.3 percent, up from 4.0 percent.

In server shipments for the fourth quarter of 2008, Hewlett-Packard remained the worldwide leader.

HP shipped 690,666 servers, down from 702,100 from the same quarter last year, or a 1.6 percent decline. However, the company saw its market share rise to 32.3 percent from 29 percent.

Dell followed with 464,072 shipped servers, down from 499,687 servers shipped, or a 7.1 percent drop. Its market share rose to 21.7 percent from 20.6 percent.

IBM, in third place, shipped 289,635 servers, down from 372,701 servers shipped, for a 22.3 percent decline. Its market share dropped from 13.5 percent from 15.4 percent.

Sun shipped 81,229 servers, down from 84,538 servers, a drop of 3.9 percent. Its market share rose to 3.8 percent from 3.5 percent.

Fujitsu/Fujistu Siemens shipped 65,088 servers, compared to 75,882 servers in the same quarter of 2008, down 14.2 percent. Its market share declined from 3.1 percent to 3.0 percent.

For the full year, the onset of the recession caused a sharp downward shift in the second half of 2008, curtailing revenue and sales, Gartner said. Worldwide server shipments increased 2.6 percent from 2007, but worldwide server revenue dropped 4.1 percent.

A bright spot was blade servers, which showed a revenue increase of 30.6 pecent and a shipment increase of 30 percent, Gartner said. HP was the leader in the blade server category, with 47.3 percent of blade shipments, while IBM followed in second at 26 percent.