x86 Servers Lead Nascent Global Server Sales Resurgence
February 25, 2010
The global economic slowdown has hit the server market particularly hard as firms have been extending the life spans of their servers by a few more years. The result was quarter after quarter of double-digit declines for all major server vendors.
But finally, the bleeding has stopped, or so Gartner reports. Worldwide server unit shipments grew 4.5 percent year-over-year in the fourth quarter of 2009, but revenue fell 3.2 percent.
Not surprisingly, the Asia/Pacific region led way, thanks to the economic strengths of China and India, with 19.6 percent year-over-year growth. That was followed by the Middle East and Africa, where shipments increased 13.4 percent, and the United States, which rose 9.0 percent.
Eastern Europe saw the largest year-over-year decline in shipments, off 13.3 percent, followed by Canada, which slipped 9.4 percent, and Latin America off 6.8 percent. Western Europe dropped 4.0 percent, and Japan dipped 1.7 percent.
IBM (NYSE: IBM) was the principal beneficiary of the server rebound, with fourth-quarter unit sales rising 10.5 percent year-over-year, followed by Dell (NASDAQ: DELL) up 4.5 percent and HP (NYSE: HPQ) up 3.8 percent. Sun Microsystems, with the cloud of uncertainty hanging over its head due to the prolonged merger with Oracle (NASDAQ: ORCL), plunged 23.8 percent.
"The recovery that began in the third quarter of 2009 based on x86 servers extended into the fourth quarter," Gartner Vice President Jeffrey Hewitt said in a statement. "However, it is important to put this into context. The fourth quarter of 2008 was quite weak, so the fourth quarter of 2009 did not have to produce huge x86 server numbers to result in an increase. At the same time, other segments like RISC/Itanium Unix and mainframes remained constrained and that exerted downward pressure on overall vendor revenue results."
Fourth-quarter x86 unit sales grew 6.3 percent, led by IBM, which enjoyed a 14.6 percent year-over-year increase. Revenue grew 14.3 percent, again led by IBM, up 37 percent. This was the one area where Sun was in positive territory, with revenue from its x86 business increasing 6.7 percent over the fourth quarter of 2008.
'09 Was Awful
The meager gains of the fourth quarter were certainly not enough to counterbalance the hemorrhaging from the prior three quarters. For the year, unit shipments were off 16.6 percent, and revenue fell 18.3 percent. In both cases, Sun Microsystems led the way.
The overall RISC market took it on the chin badly, plunging 41.2 percent in 2009 when compared with 2008. Fujitsu, which makes servers using Sun's UltraSparc processor, fell 40.2 percent, and Sun was right behind it, off 33 percent.
IBM's RISC business fell by 23.4 percent in 2009 and HP dropped 22.6 percent. RISC servers accounted for just 2.7 percent of unit sales, but made up almost 24 percent of revenue, as RISC servers are often much higher priced, mission-critical systems.
The x86 market had an only slightly less painful time. Unit sales in 2009 fell 15.7 percent and revenues dropped 13.3 percent.
The one bright spot? Blades. Blade server unit shipments decreased 11.4 percent, but saw a meager revenue increase of 1.3 percent for the year. HP was the leader in the category last year, accounting for 46.8 percent of all blade shipments. IBM was in second place at 28.2 percent.
Gartner's outlook for 2010 suggests a return to shipment growth in the middle or high single digits, and revenue growth at a slightly lower level. Sales might be higher, but many of these x86 servers are being deployed in virtualized environments where they are used to consolidate physical machines as they are replaced.