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Server sales slip by a quarter

Server sales slip by a quarter

Worldwide server sales have slumped to their lowest level since market watcher IDC started their records - but recovery could be on the cards.

It's not just consumer hardware that is facing a massive spending slowdown as the current financial doldrums make their presence felt: server sales are slipping dramatically.

As reported by CNet, market tracker IDC has published a report which reveals the true extent of the credit crunch in the server market: a massive 25 percent drop in worldwide sales.

The slump, which brings sales to their lowest point since IDC started recording market statistics twelve years ago, is mainly concentrated in the low-end of the market – defined by IDC as servers costing under $25,000 – with a drop of 30.5 percent year-on-year. Mid-range sales – defined as costing between $25,000 to under $500,000 – fared slightly better with a dip of just 13.6 percent, while high-end – greater than $500,000 – sales dropped 19.5 percent.

Box-shifter Dell has found itself hardest hit, with quarterly revenue sliding 31.2 percent in the first quarter of 2009. Rival Hewlett-Packard didn't fare much better facing a similar slump of 26.2 percent, while recently purchased Sun Microsystems dropped 25.5 percent.

The blame is placed firmly at the feet of customers choosing to “[pull] back on both new strategic IT projects and ongoing infrastructure refresh initiatives” according to IDC's group vice president of enterprise platforms Matt Eastwood. The good news is that Eastwood is hoping that “while [cost reduction] strategies are effective in the near term, server demand will begin to improve in the second half of the year as customers begin to rebuild their IT capabilities in advance of a meaningful economic recovery in 2010.

Do you believe – as Eastwood seems to believe – that the worst is now over and the technology sector can look forward to a brighter year ahead, or is IDC's optimism unfounded? Share your thoughts over in the forums.

4 Comments

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Dreaming 30th May 2009, 01:14 Quote
"fared slightly better with a dip of just 13.6 percent, while high-end – greater than $500,000 – sales dropped 19.5 percent."

How does a server cost more than $500,000 ? ??? ??
cyrilthefish 30th May 2009, 01:17 Quote
I think the big virtualisation push of late has a fair impact on this also.

At my work, they've recently replaced 25-30 physical servers with an array of 4 (admittedly very expensive and beefy) vmware servers.

it has meant in the past 6months or so, they were able to add about 6 new servers onto the network with no need for any new physical hardware whatsoever, in the past this would have entailed 6x new servers
docodine 31st May 2009, 09:08 Quote
Quote:
Originally Posted by Dreaming
"fared slightly better with a dip of just 13.6 percent, while high-end – greater than $500,000 – sales dropped 19.5 percent."

How does a server cost more than $500,000 ? ??? ??

Big racks featuring multiple Xeon E7450s and hundreds of HDDs will easily go over $500k
crazyceo 31st May 2009, 09:11 Quote
@cyrilthefish I totally agree. We've done the thing in my office.

I also ran a few price checks with Dell, HP and another independent and the conflicting prices for same specs was quite shocking. Dell and HP both came back 3 times with bigger discounts, as much as 33%. While the independent struggled to match even though they started at a much cheaper option.

Moral of the story? Playing one against other works especially when you show them the competitions quote.
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