Servers play a Q2 ace

Weak dollar and strong SME spend contribute to another quarter of revenue growth

The server market has recorded its second consecutive quarter of revenue growth, thanks largely to a weak dollar and strong SME spending.

IDC's European Server Tracker report shows that for the fourth quarter 2003 the European server market topped $4.2bn in factory revenue, an annual growth rate of 17.5 per cent.

Shipments jumped by 28.8 per cent for the same period, because of the weak dollar, falling prices and the growing impact of volume servers on the overall market. Almost 417,000 servers units were shipped in Q4 2003.

"The highly competitive European server market, characterised by price pressure and more product launches, continues to cause average system prices to fall dramatically, compared with Q4 2002, and the average price fell by nine per cent," said Nathaniel Martinez, senior research analyst at IDC's European Server Group.

"This continues to have a very positive effect on unit growth, and already indications for the first two months of Q1 2004 point to another good quarter."

For the whole of 2003, western European factory revenue generated by server sales grew by 6.1 per cent to reach $13.1bn, while unit shipments increased by 19.2 per cent to 1.3 million units.

Terry Fisher, business development manager at VAR Compusys, said: "Servers are still a consistently strong performer for us. In the public sector we see less fluctuations than in the private sector, so business is more consistent.

"Small-business server sales are up as well, since many realise that just having a computer for each member of staff is not enough."

IBM recorded 30.5 per cent growth to reach $1.75bn in factory revenue, grabbing 41.5 per cent in revenue share.

Hewlett Packard increased factory revenue by 19.4 per cent, fuelled by a 26.6 per cent increase in its Windows server business, to take a 28.8 per cent revenue share.

Troubled Sun saw its factory revenue share fall by 3.5 per cent, while Dell's revenue grew by 13 per cent to take a 5.2 per cent revenue share.

"Continued adoption of the x86 server segment and renewed activity on the Unix side helped to end calendar year 2003 on such a strong note," said Thomas Meyer, director at IDC's European Server Group.

"Finance, telecoms and manufacturing have initiated large-scale IT investments, while SMEs, lured by compelling price points, are increasingly looking at relying more on IT infrastructure to streamline and extend their value chains."