Server sales recover

IDC optimistic as year-on-year decline slows

The worldwide server systems market is healthy and improving, despite a small drop in 2003 first-quarter revenues, according to analyst firm IDC.

Revenues fell by 3.6 per cent to $10.5bn, but this was slower than the five per cent year-on-year decline recorded in Q4 2002.

The market was bolstered by strong sales in the volume server sector (servers costing less than $25,000), which jumped by 11.5 per cent year on year.

"The continued strength in the volume server space shows that the IT marketplace is still adding capacity, but it is doing so with low-cost, rack-optimised servers that fit today's restricted IT budgets," said Vernon Turner, group vice-president of global enterprise server solutions at IDC.

"Worldwide server sales in Q1 were in step with traditional seasonality, following a stronger Q4. But they also reflect new buying patterns that have emerged during the economic downturn of 2001-2002."

Terry Fisher, pre-sales and product manager at system builder Compusys, said: "The server space is definitely getting stronger. We have seen consistent growth over recent quarters and we expect that to continue."

The traditional server market king, IBM, was deposed in Q1 by Hewlett-Packard (HP), which had a 2.4 per cent lead and a worldwide share of 27.9 per cent.

Sun (12.8 per cent) and Dell (9.3 per cent) were placed third and fourth, with Dell posting strong revenue growth of 15.1 per cent year on year. Fujitsu came fifth with 5.3 per cent.

IDC referred to the Linux server market as "the brightest spot in the worldwide server market" in Q1. It posted a 35 per cent increase to $583m over Q1 2002. HP leads the sector, with IBM and Dell close behind.

Windows server revenues grew by nearly 10 per cent in Q1 2003.