Server revenue decline worst in 13 years

By Peter Dinham
Tuesday, 02 June 2009 18:44

IT Industry - Market

After negatively affecting server spending in the finance and automotive sectors, Martinez says that the economic downturn spread to all economic segments at the start of 2009, leading to recessionary environments in many countries in EMEA.
 
Martinez says that, while the technology drivers and customer needs remained unchanged, organisations and IT departments reacted to poor trading conditions and falling demand by streamlining their balance sheets and postponing and downsizing non-urgent IT investments.

IDC believes that server spending cuts are a short-term response to degrading economic conditions, but in the long-term, Martinez says organisations “will re-initiate IT infrastructure investment to lower overall cost structure and operate at a higher level of efficiency through virtualization, automation, and power-saving technologies."

Martinez’ colleague, Beatriz Valle says that, while IT refreshments are being put on hold in most industries, because companies are being extremely risk averse at present, IDC continues to see virtualization driving sales of more richly-configured server systems in certain segments, “especially where consolidation projects can drive significant savings in the short to medium term.”

"These segments include large companies in the corporate space, for which profitability is not a pressing issue, and the public sector. Meanwhile, the SMB segment is displaying very subdued demand, as most smaller companies cannot afford to invest in their IT infrastructure at the moment.”

According to Valle, IDC expects some pent-up demand to be mirrored with spending in the first half of 2010, “as the market slowly returns to its normal conditions and economic activity becomes more dynamic."

On vendors, IDC reports that HP was the top vendor, with 36.9 percent of EMEA revenue, with the total HP revenue of 68 percent coming from Proliant servers.
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