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Middle East server market crashes to new low

Massive slump in sales reveals conservative IT spending habits of regional end-users

Middle East server market crashes to new low
The server market in the Middle East and Africa has shrunk 30% in the past year.

Middle East server vendors are licking their wounds after volumes crashed 30% during the second quarter of the year. News of the slump is further confirmation of just how dramatically end-users have cut back on hardware spending since the credit crisis struck the region.

Sales of servers in the Middle East and Africa region totalled 58,000 units during Q2 — almost 25,000 fewer shipments than the same period a year before, according to latest data from IDC. The slump in purchases meant the overall value of the MEA server market declined 28% to US$316m.

Stefania Lorenz, systems research director at IDC, said the drop in shipments was a sign that the Middle East had “yet to recover” from the economic crisis.

Amazingly, despite the dire performance, the MEA market actually performed better than other regions in the EMEA theatre.

Server sales in Central and Eastern Europe nosedived 46% as every country in the geography failed to achieve growth. Western Europe recorded equally dismal figures despite seeing a revival of high-end server sales on a sequential basis.

Overall, the EMEA region suffered the ignominy of registering its lowest-ever revenues for a second quarter — down 36% year-on-year to US$2.9 billion.

In vendor terms, Fujitsu came off worst as its EMEA sales plummeted 43% against the same quarter last year. Sun and HP also had quarters they will want to quickly forget after volumes dropped 38% and 37% respectively.

Beatriz Valle, IDC analyst for European systems and infrastructures solutions, said recent industry moves in the form of acquisitions among IT vendors had compounded the overall market uncertainty about changes in the server landscape, but she forecasted greater stabilisation in the current quarter.

“Virtualisation on x86 is seen as the growth engine by server vendors hoping that business will pick up in the traditionally strong fourth quarter,” she added. “But it will take much longer than that for server revenue in EMEA to go back to the peak of US$5.4 billion seen in Q4 2007.”

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