Worldwide server revenue declined 24% in the first quarter of 2009, and shipments dropped 24,2% compared to the first quarter of 2008. According to Gartner, these are the most significant declines the server industry has experienced on a year-on-year basis.
"The significant decline that occurred in the fourth quarter of last year has extended into the beginning of this year," says Jeffrey Hewitt, research vice-president at Gartner. "While this was not unexpected, the severity of the decline was greater than predicted on a worldwide level.
"The ongoing weakness of the global economy affected all server segments. x86-based servers fell 23,9% in units and 27,1% in revenues. Unix servers also were impacted in quarterly results with drops of 31,3% in units and 20,4% in vendor revenues," Hewitt says.
The server market was negatively impacted in all geographic regions. Asia/Pacific felt the least downward pressure in terms of revenue and units with a 13,5% and 12,7% declines, respectively. The US had shipment declines of almost 27% for the quarter. In server vendor revenues, the US dropped 21,2%.
Of the top five global vendors, IBM, HP, Dell, Sun and Fujitsu/Fujitsu Siemens all had double-digit revenue declines for the first quarter of 2009.
IBM continued to lead the worldwide server market based on revenue, posting just over $3-billion in server revenue, and its market share reached 30,7%. This share
was up 1,4% year-on-year. While IBM retained the top position, it sustained a 20,4% revenue decline, with all of its server brands posting year-on-year decreases.
Of the top five vendors in server shipments worldwide, all posted double-digit decreases in units for the first quarter. HP remained the worldwide leader for the first quarter of 2009 in spite of a shipment decline of 22,3% for the year. All of HP's server brands had a year-on-year decline for the period.
The weak economic environment also impacted overall x86 server demand as x86 server shipments fell by 23,9% and revenue dropped by 27,1% for the first quarter of 2009. The least impacted server segment was x86 blade servers which fell 20,6% in units and 19,5% in vendor revenue for the first quarter. All blade server shipments declined 19,1% percent, and revenue decreased 13,8%.
"The outlook for 2009 suggests that it will be a weak year on the whole in the server space, and that from a yearly standpoint, the global server market is unlikely to return to a position of growth until 2010," says Hewitt.
In Europe, the Middle East and Africa (EMEA), server shipments totalled just over 500 000 units in the first quarter of 2009, a decline of 29% from the same period last year. Server revenue totalled $3-billion in the first quarter of 2009, a decline of 34%.
"Economic weakness continued to negatively affect the EMEA server market in the first quarter of 2009, with all segments of the market declining," says Errol Rasit, senior research analyst at Gartner. "The quarter exhibited the worst year-on-year shipment and revenue declines for more than 15 years.
"Eastern Europe, a region that has previously shown positive performance during slowing spending patterns exhibited the largest decline in EMEA, with revenue decreasing by almost 50% in the first quarter of 2009."
In the x86 market, total volumes in EMEA declined 29%, highlighted by the first quarter of year-on-year decline in blade servers since they were introduced.
Of the top five vendors, Sun's shipments decreased the slowest at 7,4%, although Sun only accounted for 2,4% of total server shipments. HP's shipments dropped 24,7%. Dell, IBM and Fujitsu each declined more than 30%, representing the wide-spread slowdown in demand for x86 servers.
Following a weak 2008, RISC and Itanium Unix revenues declined 31% in the first quarter of 2009.