Q2 server sales slump 16 per cent

IBM the only top five server vendor to grow revenue

Worldwide server revenues dropped 16 per cent in the second quarter of 2001, falling to $12.1bn from $14.4bn for the same period last year, according to research firm IDC. It is the largest decline in the server market in the past five years.

The US experienced the biggest fall, with sales for all general purpose servers falling by a quarter. Western Europe suffered a drop of eight per cent to $3.4bn, compared with $3.7bn last year.

IBM was the leading server vendor, with a 26 per cent revenue share. It was the only one of the top five vendors to increase sales, showing growth of five per cent.

Martin Hingley, vice president at IDC's European systems group, said: "IBM suffered last year because of the year 2000 scare when its customers, mostly large firms, stopped buying. They are starting to buy again."

In contrast to the general server market slump, the rack-optimised segment saw an increase in sales of 13 per cent, in comparison to the non-rack-optimised server market, which fell by 23 per cent.

"Because these racked systems are for large companies, we can infer that the server revenue decline is related to the small to medium sized enterprise [SME] market," said Hingley.

Nick Patching, sales manager at reseller Grantham Sutch, said: "We have not noticed a decline in demand from SMEs, but margins are falling as servers become more of a commodity item."