Servers thrive in Europe

Market for western Europe turns in its first positive results in more than two years

The server market for western Europe has turned in its first positive results in more than two years, according to the latest research from market watcher IDC.

Based on factory revenue, the server sector recorded revenues of $2.9bn for the third quarter of 2003, the first growth since Q1 2001.

With annual growth of 20.1 per cent, unit shipments continued to grow significantly, maintaining the strong growth already seen in the first two quarters of this year. Server unit shipments came to 312,325.

As in previous quarters, PC-based servers are driving the bulk of the double-digit growth, rising by 23.3 per cent in a year.

EPIC servers saw revenues double and unit shipments rise, but Intel's 64-bit architecture still accounts for only a small share of that sector, according to IDC.

"We are beginning to see green shoots in the industry," said Thomas Meyer, director of IDC's server group.

"Some industry sectors, such as telecommunications and finance, which have been quiet in recent times, are beginning to come back.

"Similarly, there is renewed activity in the large project sector. However, sales cycles remain lengthy, and the cost focus means that prices continue to be under pressure for box and solution sales."

Les Billing, managing director of distributor Microtronica, said: "Servers have been one of the high points of the year, especially at the low end, with single- and dual-processor systems.

"We've seen significant growth in the sale of Intel server components, particularly on the Xeon processor front, but there has been some uptake of AMD's Opteron.

"Hewlett-Packard [HP] and IBM have just announced Opteron systems and that adds credibility. Overall, the white box server market has grown more than the branded sector."

Strong spending by SMEs was again cited as the main driver for the strong unit sales. Compared with the same quarter in 2002, average prices declined by an average of 12 per cent.

In the vendor rankings, IBM remained on top, according to factory revenues, generating 16 per cent growth and revenues of $927m.

HP led on unit sales and closed the revenue gap on IBM to 1.3 per cent. Dell, with 31 per cent growth, performed strongly but price wars resulted in marginal revenue growth.