Server sales slip by a quarter

May 29, 2009 // 12:33 p.m.

Tags: #credit-crunch #idc #sales #server-sales #slump

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.
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