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Non-x86 server sales slump: report

International Data Corporation EMEA Quarterly Server Tracker shows 22.5% spending decrease

Non-x86 server sales slump: report
Spending on non-X86 servers has slumped over 22% according to the International Data Corporation's (IDC) EMEA Quarterly Server Tracker.

According to International Data Corporation's (IDC) EMEA Quarterly Server Tracker, spending on non-x86 servers slumped 22.5% annually in 3Q10, with sales of $939.3 million. This is a far cry from their peak of $3.7 billion in Q4 1996.

This is the first time since IDC records began in 1996 that sales for this segment were under $1 billion. However, there is some evidence of rising demand in the upcoming quarters, as IT organisations, banking, government and telecoms are looking to upgrade their servers as updated products are being released, according to IDC.

"Cloud is increasingly turning into a driving force on the European server market place. Telcos, service providers, and hosting companies of all sizes and across the land are engaging in data centre consolidation projects and at the same time investing in additional server capacity to support new offerings centered on cloud computing," said Nathaniel Martinez, research director in the Enterprise Server Group for IDC EMEA. "Large HPC deals across multiple segments such as defense, academia, banking, and the pharmaceutical and utilities industries are also fueling additional demand for x86 servers."

The report showed that EMEA server revenue in Q310 reached $3.1 billion, up 6.4% from Q309. The volume of servers shipped was also up, with a 10.2% increase year-on-year. Around 550,000 units were sold this quarter.

"The EMEA server revenue growth is a positive indicator that the market is gaining traction and benefitting from refreshment activity in the hardware area. Banks and to a lesser degree insurance companies are currently engaged in server refreshes and adding new server capacity," said Beatriz Valle, senior research analyst in the Enterprise Server Group for IDC EMEA. "Server spending in the government segment remains healthy in France and Germany, although it is contracting in the UK and Italy. In the SMB segment, virtualisation deployments are gaining steam."

However, despite these increases, server markets are still a long way from their peak in 2007, when revenue recorded was $5.4 billion.

Central and Eastern Europe, the Middle East, and Africa (CEMA) shipped 147,000 units worth $743.50 million, recording a year-on-year growth of 14.6% in value and 17.9% in volume in 3Q10, according to the report.

The highest growth went to Central and Eastern Europe (CEE) with revenues of $383 million, representing 27.8% year-on-year growth. These figures were due to market recovery across most countries in the region.

The growth rate for the Middle East and Africa (MEA) was only 3.3% year on year, with the market value rising to $360.5 million. According to industry experts, the markets in Saudi Arabia, Turkey, and the United Arab Emirates all declined.

According to Senior Research Analyst Jiri Helebrand, IDC CEMA: "The server market was driven by demand in both the public sector and the large-enterprise end-user segment. After the slowdown witnessed during the crisis, investment in IT is returning, and we expect it to continue in the coming quarters. Contrary to the situation in CEE, only two countries recorded double-digit growth in MEA, namely South Africa and Israel."

By technology, x86 industry standard servers were the most dominant technology, according to the International Data Corporation's (IDC) EMEA Quarterly Server Tracker, with $2.2 billion in revenue and 533,000 shipment units. This reflects an annual growth of 26.5% and 11% respectively.

"Blade servers performed stronger than the overall server market, but paradoxically that was due to the boost in non-x86-based machines, accounting for $63 million in revenue in the wake of strong double-digit growth in the EPIC and RISC offerings from HP and IBM particularly. The outlook for non-x86 blades remains strong in 4Q10 too as vendors transition part or all of their midrange portfolios onto the blade form factor. The situation is different in the x86 camp. Here, the new focus on scale-out infrastructures and on scale-up multiprocessor boxes has kept blade unit shares virtually unchanged year on year. Despite huge demand in emerging countries such as Russia and Israel, x86 blades produced 19% yearly revenue growth, which did not match the 40% year-on-year revenue growth in rack-mount machines in the quarter," said Giorgio Nebuloni, senior research analyst in the Enterprise Server Group for IDC EMEA.

HP maintained its top spot for the 11th consecutive quarter after growing its market share over three percentage points in 3Q10 due to its x86 ProLiant server line which exceeded the $1 billion mark this quarter.

IBM also maintained a strong position with its x86 server line System x, whose revenue was up 13% in 3Q10 on 3Q09, generating over 40% of its EMEA revenue for the quarter.

With a two percentage point increase, Dell saw its revenue share of the EMEA market expand on the back of strong sales of its PowerEdge Series, up 19.1% year on year.

Fujitsu's sales of the x86 line of Primergy servers also improved in line with the market, growing 15.1% year on year.

Oracle was the only loser this quarter, seeing its overall market share decrease year-on-year on the back of weaker market sales of RISC Unix systems.

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