IDC’s Worldwide Quarterly Server Tracker recorded poor numbers in Q2. Factory revenue in the worldwide server market declined 30.1 percent year over year to $9.8 billion, the fourth consecutive quarter of revenue decline and the lowest quarterly server revenue since IDC began tracking the server market on a quarterly basis in 1996. Server unit shipments also declined 30.4 percent year over year in 2Q09, up from the 26.5 percent decline experienced in 1Q09 and representing the largest ever year-over-year quarterly server unit decline.
For the channel, the Q2 numbers are even worse, because the commercial sector was weak.
"The public sector is probably the only bright spot out there in the server market right now," said Matt Eastwood, group vice president of Enterprise Platforms at IDC. But despite this, Eastwood thinks the channel has valid reason for optimism.
"We believe we’ve found the bottom," he said. "About 90 percent of the loss has already happened. We think we are about to change shape and direction in the market. In the past year, everyone in the buy side was looking on the rear view mirror, spending as little as possible to get buy. These people are now starting to look more at projects, where we will go next and what kind of things will be required. For partners, any momentum they can build now here will carry over into the recovery."
This need to leave the past behind and refocus on a much more optimistic outlook ahead is key, Eastwood said.
The dropoff was consistent among all server classes, year-over-year. Volume systems declined 30.0 percent, midrange enterprise revenue was off 28.1percent, and the high-end enterprise segment declined 32.0 percent. This is the third consecutive quarter that all three server segments have experienced a year-over-year revenue decline in the same quarter.
"We will see the x86 market come back the first in all likelihood, and then the more value ones like UNIX and mainframe, which haven’t been down as long or in the way x86s were, since they were install base plays anyway," Eastwood said.
Eastwood also thinks the relative stability between the sectors of the market, which has been pretty much the same since the dotcom bust, may be about to see some changes. "The UNIX market was about half the market until the dotcom exposition, then a third since that point. Now things may start moving again."
IBM held onto its number 1 spot in the worldwide server systems market with 34.5 percent market share in factory revenue for 2Q09, and gained 1.8 points of share in the quarter on the performance of System x and System p. HP maintained the number 2 spot with 28.5 percent share for the quarter, on a 30.4 percent year-over-year revenue decline. Dell and Sun held the number 3 and 4 market positions with 12.4 percent and 10.0 percent factory revenue share respectively. Dell’s factory revenue declined 26.8 percent and increased their market share by 0.6 pts year over year while Sun’s factory revenue declined 37.2 percent year over year. Fujitsu/Fujitsu-Siemens maintained its fifth-place standing in terms of factory revenue, with 3.5 percent market share in the quarter.
Sun, of course, is the wild card going forward, with only guesses at this point about the future of its’ hardware business after Oracle takes over, and aggressive moves by both IBM and HP to poach Sun customers and partners.
"The time after Oracle absorbs Sun will be key," Eastwood said. "The longer it takes to get their story out there, about where Sun is headed, the more permanent damage it is going to do."
I don’t think Oracle will be committed to SPARC, but if they are, they need to get that strategy out there very quickly. This segment of the market doesn’t like uncertainty, and people know IBM isn’t going anywhere, so it does become the safe bet."
The blade server market segment also experienced quarterly revenue declines for the second consecutive quarter, but did better comparatively than other segments, with factory revenue falling 12.1 percent year over year on a 19.8 percent year-over-year shipment decline. Overall, bladed servers, including x86, EPIC, and RISC blades, accounted for $1.2 billion in the first quarter, representing 11.7 percent of quarterly server revenue. IBM exhibited the strongest blade server performance of the top 5 OEMs, gaining 3.8 points of market share on 2.3percent year-over-year factory revenue growth. HP led the market with 52.9 percent revenue share as IBM held second place with 27.2percent revenue share and Dell maintained the third position with 9.1 percent revenue share.
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