Analyst Says Dell Stands to Gain First in Server Rebound

By Jessica Davis  |  Print this article Print

When the dust settles at the end of 2009, who stands to gain in terms of server sales? One theory is that Dell's price-shopping customers were the first to cut their budgets, and they will be the first to start buying again. Here's how Dell, Hewlett-Packard, IBM and Sun Microsystems stand to fare in the x86 space.

Nobody's going to argue with the fact that x86 server sales were dismal in 2009. Blame it on a combination of a recession that tightened IT budgets together with the effects of virtualization and server consolidation and purchase delays.

But what will 2010 look like for VARs looking to sell server hardware to customers? Plenty of people in the industry have high hopes for server sales next year due to the release of Microsoft Windows Server 2008 R2. And server manufacturers such as Dell and Hewlett-Packard are rubbing their hands together in anticipation of 2010, talking about a big PC refresh next year during their recent earnings calls.

But Bob Gill, managing director of server research at TheInfoPro, says while some spending will rebound, there won't be huge growth, in the server market particularly. Servers enjoyed big sales during 2007 and 2008, he says, and there's a lot of capacity out there still. Nevertheless, the vendor most likely to gain in the server space in the short term is Dell.

"I show a good rebound for Dell late this year and in early 2010," says Gill. "Their price-sensitive customers were the first to tail off in spending" so they will be the first to return. HP will not see as good a rebound, he predicts.

Meanwhile, IBM has dropped off the map in terms of x86 sales, says Gill.

"They've put a lot more emphasis on the higher-margin big-box server, and x86 seems to be an afterthought for them, so a lot of their customers have moved over to Dell or HP," says Gill. "They've fallen from No. 1 in the market to a distant third. HP has left IBM in the dust."

Gill notes that Lenovo, which licenses IBM's x86 server technology, was selling the same product cheaper than IBM at a recent trade show. "What would you buy?" he asks.

As for Sun Microsystems, Gill says he believes it will have "a really bad year next year."

While sequential quarterly server sales overall have been on the rise, the comparisons are to the deep gully in the market created during the recession and year-over-year comparisons are still dropping, according to analyst company IDC. However, IDC says that server sales are gaining momentum and will continue to do so for 2010 as new chips from Intel and AMD and new software from Microsoft drive sales.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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