Server market hits nadir in Q1

Poor show: all strands of the server market suffered in Q1

The worldwide server market suffered its worst ever quarter during 2009's first three months as both shipments and revenue slumped by about a quarter.

Research from IDC finds Q1 2009 sales plummeted 24.5 per cent year on year to $9.9bn (£6.2bn). This is the first time the market has endured a sub-$10bn quarter since IDC began tracking it 12 years ago.

Overall shipments declined 26.5 per cent as the volume systems, mid-range enterprise and high-end enterprise markets all shrank sharply. Revenue for all the top five vendors – HP, IBM, Dell, Sun and Fujitsu – declined by about a fifth or more.

IBM caught HP to take joint top spot as both firms' revenue stood at $2.9bn, giving them each 29.3 per cent of the market. Big Blue's sales dropped off 19.9 per cent, while HP endured a 26.2 per cent decline.

Dell lost ground in third place as revenue tumbled 31.2 per cent and market share slipped by more than a point to 11 per cent. Sun was hot on the PC titan's heels, after its revenue dropped by 25.5 per cent to $1bn, handing it a 10.3 per cent slice of the market.

Fifth-placed Fujitsu's pain was marginally less acute than its rivals, after revenues dipped 18.8 per cent to $667m. The Japanese firm snagged 6.7 per cent of the market, a half-point increase on 2008's opening quarter. Revenue from all other vendors fell 26.1 per cent to $1.3bn, accounting for 13.4 per cent of the market.

Revenue from Microsoft Windows Servers dropped 28.9 per cent to $3.7bn, which constituted 37.3 per cent of the worldwide total. Linux server revenue declined 24.8 per cent to $1.4bn, representing 13.8 per cent of the market.

The blade server market suffered its first ever quarterly decline, with revenue falling 14.4 per cent on a year-on-year shipment drop of 18.1 per cent. HP led the market with a 52.2 per cent share.

Despite the gloomy figures, Matt Eastwood, IDC's group vice president of enterprise platforms, foresaw a brighter end to 2009. "Market conditions worsened in all geographic regions during the first quarter as customers of all types pulled back on both new strategic IT projects and ongoing infrastructure refresh initiatives," he said.

"Most enterprise organisations are deferring new IT procurements and instead focusing on extending server life cycles and improving existing asset use. IDC believes that while these strategies are effective in the near term, server demand will begin to improve in the second half of the year as customers begin to rebuild their IT capabilities in advance of a meaningful economic recovery in 2010."