Worldwide Server Revenue Slips 20 Percent for First Quarter

IDC released first quarter worldwide server revenue stats Friday, revealing a market in decline for the fifth consecutive quarter.

According to the research firm, worldwide server factory revenue contracted 20 percent from $13.4 billion in 1Q01 to $10.7 billion in 1Q02. Unit shipments remained flat at 1.059 million units from 1Q01.

IDC released first quarter worldwide server revenue stats Friday, revealing a market in decline for the fifth consecutive quarter.

The global Unix server market contracted more than the overall market, with revenue declining 24 percent to $4.7 billion. Sun Microsystems led in this space with 34 percent market share, followed by HP with 27 percent. IBM and Compaq rounded out the top 4 vendors with 17 percent and 7 percent market share, respectively.

But IDC believes the end of the slump is in sight.

“While the market continued to decline, results certainly indicate that the environment is improving,” said Vernon Turner, IDC’s group vice president of Global Enterprise Server Solutions. “Relatively flat sequential growth for Sun Microsystems, Dell, and Compaq’s Industry Standard Server Group all help point to firming conditions for the volume server market and a return to a more predictable demand.”

IDC’s findings reveal the top-five vendors in the worldwide market based on revenue share for 1Q02 were IBM (with 23 percent), Compaq (with 17 percent), Sun Microsystems (with 14.8 percent), Hewlett-Packard (with 14.6 percent), and Dell (with 8 percent).

According to Steve Josselyn, research director, Enterprise Server Fundamentals program, “IDC believes that the infrastructure buildout has worked out much of its excess hardware inventory; therefore, demand is expected to return later this year.”

“Despite the larger than expected decline for the first quarter, the server market landscape will change dramatically over the course of the next few years with the introduction of the blade servers,” adds Mark Melenovsky, IDC’s research manager for Server and Infrastructure Hardware research.

IDC noted that the blade server market shipped roughly 6,700 units and performed much better than expected for the first quarter, giving it a “nice baseline.” High-performance clustered environments in Western Europe showed especially strong demand for blade offerings.

IDC’s Worldwide Quarterly Server Tracker compiled this data. The Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. It includes quarterly shipments (ISS and upgrades) and revenue (customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture.

The Tracker is available for purchase from Hoang Nguyen at +1 508 935 4718 or hnguyen@idc.com.

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