The UK server market is still recovering fast, despite a small drop off in units shipped in the second quarter of 2003.
In its quarterly server tracking findings, analyst IDC said the Q2 market for servers in the UK had declined slightly against Q1 but jumped 14.5 per cent from Q2 2002.
For the second quarter more than 60,000 servers were sold. But due to increased price competition, the strong unit shipments did not translate into turnover, with Q2 2003 sales - $535m - down 7.1 per cent on Q2 2002.
The average system value of servers sold in the UK was $8,325, a fall of 18 per cent from the average value in Q2 last year.
"Despite declining revenues in the UK, the overall picture is starting to look brighter as we continue to see the number of servers sold grow," said Oliver Harcourt, research analyst at IDC's European Server Group.
"Such revenue declines can largely be attributed to increasingly competitive pricing and the trend towards lower-priced servers."
The upturn in UK server sales is also being experienced in the system builder arena.
Terry Fisher, pre-sales and product manager at Compusys, said: "We are seeing stronger server sales across all of our market sectors.
"This is especially true in our public-sector and local government markets because they are not affected by the constrained budgets of the private sector.
"Dual-processor rackmount servers are popular and, while margins have dropped, they have not been hit too hard."
IDC claimed that continued price cutting was putting more pressure on vendors, particularly in the volume server space.
Thomas Meyer, manager of IDC's European Server Group, said: "As vendors decrease prices further, capitalising in part on the favourable exchange rate conversions, this has a severe effect on margins, forcing vendors to revisit their business yet again."
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