IDC: EMEA server market slides in Q1

Dell is the only vendor in the top five to see growth in the quarter, analyst claims

HP clung onto the EMEA server market crown in the first quarter of 2012 but saw revenue drop 19 per cent, according to IDC’s latest market research.

Indeed, the overall server market saw a decline, as overall revenue dropped 11.9 per cent to $3.1bn, when compared with Q1 2011.

Also making the IDC top five were IBM, Dell, Oracle and Fujitsu; with Dell the only one out of the group experiencing any growth (6.3 per cent).

Shipments reached 556,877 units, representing a 3.8 per cent annual decline, the market watcher said.

Quarter-on-quarter performance was weaker than the annual one, IDC claimed, with double-digit declines in both the value and the volume channel – down 23.9 per cent and 13.1 per cent respectively.

This was the second consecutive quarter of annual revenue declines, and the first double-digit decrease since Q3 2009. The x86 server segment remained the main growth engine, with revenue of $2.2bn, or 73 per cent of the total value market.

Non x86 sales fell below the $1bn mark to $841.9m, a 28.7 per cent decline.

Nathaniel Martinez, research director of the enterprise server group for IDC EMEA, said: “EMEA server vendors in Q1 2012 continued to face up to a number of market challenges, compounded by a very difficult economic environment. Overall, the EMEA server market in 1Q12 was in line with IDC expectations and presented a very mixed picture in terms of server spending, with countries across the region showing important discrepancies in terms of trends.

“Large HPC projects and investments in public cloud infrastructures from hosters and Web 2.0 players and private cloud infrastructure projects in the large enterprise continue to play out significantly in those differences,” he added.

Drilling down into Western Europe, the market continued to reflect the general trend towards x86 servers, generating sales of $1.6bn, or 71.8 per cent of total factory revenue, compared with 65.4 per cent in Q1 2011.

Non x86 sales represent just 28.2 per cent of the total Western European market, IDC claimed.

Beatriz Valle, senior research analyst in the Enterprise Server Group at IDC, said: “The Western European region is a mature market and the difficult macroeconomic conditions, as well as the uncertainty about the future of the euro area, compounded the current slowdown in server spending, particularly in the non-x86 market, leading to server sales declines sharper than in other EMEA subregions. Demand for mainframes was the worst hit, followed by a softer slowdown in the RISC Unix area."

"Server sales are also influenced by the timing to market of new hardware releases, and the x86 segment has been very dynamic whereas the mainframe area has not produced important hardware releases in the last 12 to 18 months, adding to the overall slowdown in sales cycles."

Market Highlights

• x86 revenue reached $2.2bn, equivalent to 73 per cent of the total market and a decline of 3.4 per cent annually. This was the 13th consecutive quarter in which x86 sales surpassed non-x86 servers, as the market trend toward industry standard servers consolidates.

• By operating system, Windows held 52 per cent of the market, generating hardware spending of around $1.6bn, down 0.6 per cent year on year. Linux was the only operating system to experience positive growth year on year, up 6.5 per cent at $750m, or around 20.7 per cent of total market sales. Q1 2012 was the second time that Linux overtook Unix in market share since records began. The first time this happened was in Q3 2011. Unix declined 27.6 per cent on the back of weaker RISC system sales, with sales of $542.4m. Of the main operating systems, only z/OS declined faster that Unix, by 39.3 per cent to reach $201.9m.

• Volume servers continued to hold the overwhelming majority stake in the market, with 69.9 per cent of total revenue, or $2.1bn, despite a decline of 6.3 per cent. Both the midrange and high-end segments saw double-digit declines, at 16.6 per cent and 25.6 per cent respectively. High-end server revenue reached only $590.5m, around 18.9 per cent of the total EMEA market, due to a slowdown in mainframe sales.

• From a form factor perspective, racks remained the single largest segment of the market, with $1.5bn, equivalent to 50.5 per cent of total sales, but declining 9.3 per cent year on year. Tower or standalone servers suffered a sharp decline, down 22 per cent year on year.