According to IDC's EMEA Quarterly Server Tracker, the EMEA server market ended 2006 on a strong note, as for the first time it exceeded the $5-billion revenue threshold in the fourth quarter of the year, up 7% over the same quarter the year before.

This marked the strongest annual revenue growth rate in nine quarters. Unit shipment growth in the same period was marginal, at 1%, representing 689,000 units sold, but still corresponding to an all-time high for the EMEA server market.

According to Nathaniel Martinez, european enterprise servers program manager at IDC: "Server virtualization and consolidation projects are driving most of the growth on the server market as evidenced by an increase in average selling value on the market and activity slowdown for entry-level servers.

"Whereas server virtualization is mainly used as a platform for consolidation in large accounts, small and medium organisations are starting to consider it in order to gain access to technology they could not afford in the past, such as high availability, redundancy systems, and backup and recovery tools."

"The downward pressure seen on prices during the first quarters of 2006 is now reversing," said Beatriz Valle, a European Enterprise Server Solutions analyst at IDC.

"Organisations across EMEA are increasingly looking at shifting their IT infrastructure toward a shared compute resource, which in turn drives demand for additional scalability, memory attachment, and I/O. In addition, in some regions, replacement activity for high-end RISC and mainframe systems has also acted as a market driver."

Western Europe saw factory revenue rise 7% annually to more than $4-billion, while shipments remained at similar levels as in the same quarter of 2005. Sweden was the top-performing country, although Germany's annual growth of 20% was instrumental in boosting market performance in the whole region.

"Vendors in both Central and Eastern Europe and the Middle East and Africa reported unexpectedly large revenue growth of more than 17% year on year in the high-end server space, with demand driven by countries such as the Czech Republic, Croatia, Egypt, the United Arab Emirates, and some of the smaller markets in the Rest of CEE, with HP, Sun, and FSC taking the lion's share of the market in these countries," said Stefania Lorenz, program manager, IDC CEMA. "Key investments by telcos, banks, healthcare firms, and governments drove the dramatic jump in the high-end server segment."

 

IDC server market findings

* Midrange servers are going through a significant recovery, with year-on-year revenue up 15%, the fastest growth rate across all server classes.

* Linux revenue growth is accelerating, growing by 39% to grab 12% revenue share when compared with 4Q05. Windows and Unix tied at 33% of total sales, due to considerable Unix uptake in the Middle East and Africa.

* More than 80% of systems shipped in EMEA are now x86 servers with 64-bit extensions. The second fastest-growing processor in the region is EPIC, with a factory revenue increase of 55% year over year to nearly $400-million.

* Factory revenue from bladed servers, including x86, EPIC, and RISC blades, rose 35% annually and accounted for 5,6% of EMEA server market revenue, compared to 4,4% the same quarter a year before. Shipments of rack-optimized servers hit the number 1 spot with more than 55% of the volume server market.

 

IDC market findings by vendor

* IBM remained the largest vendor in the EMEA server system market, growing factory revenue by 3%, largely due to strong performances by System p and System x servers.

* Hewlett-Packard held on to the number 2 spot and saw its server sales grow well above the average by 10% annually. Revenue from Proliant servers hovered around the $1 billion mark in 4Q06 in EMEA, representing over 19% of total server revenue in the region.

* Sun Microsystems continues to be the comeback story of the server market and recorded a substantial 20% year-on-year revenue growth. Its high-end servers benefited from strong replacement activity in its customer base, while it also tapped into new markets, and regained customers in some cases, with refreshed Galaxy and SunFire server lines.

* Though suffering from weaker Primergy unit sales, Fujitsu Siemens also had a good quarter, with 10% year-on-year revenue mainly driven by its high-end enterprise offerings. Dell, meanwhile, grew below market with annual growth of 3,5%.
For the full year 2006, EMEA server factory revenue rose 2% to nearly $17-billion. 2006 saw each subregion maintaining the same revenue share as in 2005, with sales in Western Europe making up 88% of the market. Revenue from x86 servers rose from $99-million to nearly $700 million in the Middle East and Africa. IBM led the EMEA server market with 33% revenue share, closely followed by HP with 32%.