IDC Readjusts 2Q Server Revenue Forecast yet Remains Hopeful About Rebound

By Amy Newman (Send Email)
Posted Jun 14, 2002


Despite IDC's optimism that the negative growth exhibited in the past five consecutive quarters would soon turn around, weaker than expected recovery in the U.S. and Japanese economies has led the research firm to lower its worldwide server market expectations for 2002.

IDC anticipates worldwide server revenue will decline 14.5 percent. This is an improvement from the 20 percent decrease in sales seen in the second quarter.

Despite IDC's optimism that the negative growth exhibited in the past five consecutive quarters would soon turn around, weaker than expected recovery in the U.S. and Japanese economies has led the research firm to lower its worldwide server market expectations for 2002.

IDC continues to forecast a return to positive growth in the third and fourth quarters of 2002 that will continue into 2003. However, the research firm now believes that the recovery will not be enough to offset declines experienced during the first half of the year. IDC anticipates the overall year-over-year decline for the worldwide server market will be -5%.

"After almost two years of battling tough economic conditions and capital spending freezes, the server market is well positioned to regain momentum in 2003 and beyond," said Vernon Turner, IDC's group vice president of Global Enterprise Server Solutions.

IDC anticipates that the server market will achieve a compound annual growth rate of 3.8 percent during the next five years, resulting in a $66.9 billion opportunity in 2006.

From a regional perspective, the U.S. market will continue to have the greatest share of the server market by the end of the forecast period. This is followed by Western Europe and the Asia/Pacific region, excluding Japan. While the Japanese market is expected to remain flat, the rest of the Asia/Pacific region will experience significant growth with a projected 9 percent CAGR during the next five years. A wave of telecom server investments that will begin to unfold after 2003 will fuel this growth.

Another area poised for growth is the blade segment of the server market. IDC expects the blade market to reach $3.7 billion by 2006. Server blades are anticipated to represent 20 percent of server unit shipments by the end of the five-year forecast period.

Proprietary mainframe systems, on the other hand, will lose share during this same time frame, declining from approximately 13 percent in 2001 to 8 percent in 2006.

"Much of the decline in share for mainframe systems is attributed to the transition of some workloads moving to Unix- and Windows-based systems in Japan. There is still considerable investment in IBM zSeries machines, which will remain an important element of many end users' computing infrastructures going forward," said Steve Josselyn, research director, Enterprise Server Fundamentals program.

These findings are part of IDC's Worldwide Quarterly Server Forecast. The Forecast includes quarterly shipments (both ISS and upgrades) and customer revenues segmented by region, operating system, price band, CPU type, form factor, and CPU capacity.


Related Stories:
Worldwide Server Revenue Slips 20 Percent for First Quarter


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