IBM Cloud Authors: Zakia Bouachraoui, Elizabeth White, Yeshim Deniz, Pat Romanski, Liz McMillan

News Feed Item

Server Market Deceleration Continues in Second Quarter, But Signs of Stabilization Emerge, According to IDC

According to IDC's Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market declined 30.1% year over year to $9.8 billion in the second quarter of 2009 (2Q09). This is the fourth consecutive quarter of revenue decline and the lowest quarterly server revenue since IDC began tracking the server market on a quarterly basis in 1996. Server unit shipments declined 30.4% year over year in 2Q09, accelerating from the 26.5% decline experienced in 1Q09 and representing the largest ever year-over-year quarterly server unit decline as customers continued to defer server refresh activities.

Revenue for all classes of servers weakened further in the second quarter, with volume systems declining 30.0% and midrange enterprise revenue off 28.1% year over year. The slowdown extended to the high-end enterprise segment where revenue declined 32.0% when compared to the same quarter one year ago. This is the third consecutive quarter that all three server segments have experienced a year-over-year revenue decline in the same quarter.

"Over the past four quarters, the worldwide server market has experienced significant revenue deceleration in all geographic regions as the economic recession has deepened," said Matt Eastwood, group vice president of Enterprise Platforms at IDC. "Fewer servers have been shipped over the past four quarters than at any time since 2005 and it is clear that the worldwide server installed base is aging rapidly. In the weeks and months ahead, IDC believes that IT customers around the globe will begin to focus on the future once again, making strategic compute platform decisions for the next business cycle, and driving more predictable server demand as market conditions stabilize in the second half of 2009."

Overall Server Market Standings, by Vendor

IBM held onto its number 1 spot in the worldwide server systems market with 34.5% market share in factory revenue for 2Q09 and gaining 1.8 points of share in the quarter on the performance of System x and System p. HP maintained the number 2 spot with 28.5% share for the quarter, on a 30.4% year-over-year revenue decline. Dell and Sun held the number 3 and 4 market positions with 12.4% and 10.0% factory revenue share respectively. Dell's factory revenue declined 26.8% and increased their market share by 0.6 pts year over year while Sun's factory revenue declined 37.2% year over year. Fujitsu/Fujitsu-Siemens maintained its fifth-place standing in terms of factory revenue, with 3.5% market share in the quarter.

Top-Level Server Market Findings

  • The market for non-x86 servers, including servers based on RISC, EPIC, and CISC processors, declined 32.2% year over year to $4.7 billion in 2Q09. After outperforming x86 servers recently, this is the first time in the past six quarters that non-x86 servers have underperformed x86 servers in the market. IBM maintained its leadership position, posting 53.3% share in this segment, followed by Hewlett Packard (19.2%) and Sun Microsystems (17.3%), respectively, based on factory revenue.
  • Microsoft Windows server revenue was $3.7 billion in 2Q09 showing a 27.7% year-over-year decline and comprising 38.1% of all server revenue in the quarter. Windows servers account for the single largest segment of spending, by operating system, in the worldwide server market.
  • Linux server revenue declined 28.9% year-over-year to $1.3 billion in the quarter. Linux servers now represent 13.8% of all server revenue, up slightly from 13.5% a year ago.
  • Unix servers experienced a 30.9% revenue decline when compared with 2Q08. Worldwide Unix revenues were $3.1 billion for the quarter, representing 31.5% of quarterly server spending. IBM gained 7.4 points of share year over year and holds the 2Q09 leadership position, posting 41.4% share in this segment, followed by Sun Microsystems (27.3%) and Hewlett Packard (24.8%) respectively, based on factory revenue.

x86 Server Market Dynamics

The x86 server market remained weak in 2Q09, declining 28.1% in the quarter to $5.2 billion worldwide as unit shipments declined 30.0% to 1.4 million servers. This is the lowest x86 server revenue since 3Q03 with the top 3 x86 server vendors all experiencing server revenue declines of 20% or more in the quarter. IBM exhibited the strongest x86 performance of the top 3 OEMs, gaining 1.4 points of market share on a 21.8% year-over-year factory revenue decline. HP led the market with 36.9% revenue share as Dell held second place with 23.7% revenue share and IBM maintained the third position with 17.5% revenue share.

"x86 servers continued to show marked weakness due to economic instability throughout the second quarter. While the year-over-year revenue decline is particularly steep, it should be noted that the comparison was to a strong second quarter in 2008, which had the highest second quarter revenue for the x86 market since 2004," said Daniel Harrington, research analyst, Enterprise Server Group. "This quarter’s performance was not unexpected, and with the lack of normalcy from seasonal patterns it should be noted that unit shipments did increase quarter over quarter. IDC believes that due to constrained IT budgets, users refrained from investing what capital they had in preparation for the significant product refresh led by the latest AMD Istanbul and Intel Nehalem server CPU's, which began ramping during the quarter. Indications from the market support an optimistic view for x86 in the coming quarters.”

Blade Server Market Shows Strong Shipment and Revenue Growth

The blade server market segment experienced quarterly revenue declines for the second consecutive quarter with factory revenue falling 12.1% year over year on a 19.8% year-over-year shipment decline. Overall, bladed servers, including x86, EPIC, and RISC blades, accounted for $1.2 billion in the first quarter, representing 11.7% of quarterly server revenue. IBM exhibited the strongest blade server performance of the top 5 OEMs, gaining 3.8 points of market share on 2.3% year-over-year factory revenue growth. HP led the market with 52.9% revenue share as IBM held second place with 27.2% revenue share and Dell maintained the third position with 9.1% revenue share.

"Compared to the overall server market, the blade segment experienced relatively good results for the quarter,“ said Jed Scaramella, senior research analyst in IDC's Datacenter and Enterprise Server group. "The converge nature of the blade platform enables IT organizations to increase IT efficiency through improving manageability and lowering operating expenses. These are key customer criteria during the current economic recession."

Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, Second Quarter of 2009

(Revenues are in Millions)











IBM $3,385 34.5% $4,596 32.7%


Hewlett-Packard $2,798 28.5% $4,017 28.6% -30.4%
Dell $1,221 12.4% $1,667 11.9% -26.8%
Sun Microsystems $981 10.0% $1,562 11.1% -37.2%
Fujitsu/Fujitsu Siemens $345 3.5% $531 3.8% -35.0%
Others $1,084 11.0% $1,668 11.9% -35.0%
All Vendors $9,814 100% $14,040 100% -30.1%

IDC's Worldwide Quarterly Server Tracker, September 2009

IDC's Server Taxonomy

IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers (servers priced less than $25,000), midrange enterprise servers ($25,000 to $499,999), and high-end enterprise servers ($500,000 or more). The revenue data presented in this release is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market-share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments.

IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture. For more information, please contact Hoang Nguyen at 508-935-4718 or hnguyen@idc.com.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 45 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

All product and company names may be trademarks or registered trademarks of their respective holders.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

IoT & Smart Cities Stories
The platform combines the strengths of Singtel's extensive, intelligent network capabilities with Microsoft's cloud expertise to create a unique solution that sets new standards for IoT applications," said Mr Diomedes Kastanis, Head of IoT at Singtel. "Our solution provides speed, transparency and flexibility, paving the way for a more pervasive use of IoT to accelerate enterprises' digitalisation efforts. AI-powered intelligent connectivity over Microsoft Azure will be the fastest connected pat...
There are many examples of disruption in consumer space – Uber disrupting the cab industry, Airbnb disrupting the hospitality industry and so on; but have you wondered who is disrupting support and operations? AISERA helps make businesses and customers successful by offering consumer-like user experience for support and operations. We have built the world’s first AI-driven IT / HR / Cloud / Customer Support and Operations solution.
Codete accelerates their clients growth through technological expertise and experience. Codite team works with organizations to meet the challenges that digitalization presents. Their clients include digital start-ups as well as established enterprises in the IT industry. To stay competitive in a highly innovative IT industry, strong R&D departments and bold spin-off initiatives is a must. Codete Data Science and Software Architects teams help corporate clients to stay up to date with the mod...
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
Druva is the global leader in Cloud Data Protection and Management, delivering the industry's first data management-as-a-service solution that aggregates data from endpoints, servers and cloud applications and leverages the public cloud to offer a single pane of glass to enable data protection, governance and intelligence-dramatically increasing the availability and visibility of business critical information, while reducing the risk, cost and complexity of managing and protecting it. Druva's...
BMC has unmatched experience in IT management, supporting 92 of the Forbes Global 100, and earning recognition as an ITSM Gartner Magic Quadrant Leader for five years running. Our solutions offer speed, agility, and efficiency to tackle business challenges in the areas of service management, automation, operations, and the mainframe.
The Jevons Paradox suggests that when technological advances increase efficiency of a resource, it results in an overall increase in consumption. Writing on the increased use of coal as a result of technological improvements, 19th-century economist William Stanley Jevons found that these improvements led to the development of new ways to utilize coal. In his session at 19th Cloud Expo, Mark Thiele, Chief Strategy Officer for Apcera, compared the Jevons Paradox to modern-day enterprise IT, examin...
With 10 simultaneous tracks, keynotes, general sessions and targeted breakout classes, @CloudEXPO and DXWorldEXPO are two of the most important technology events of the year. Since its launch over eight years ago, @CloudEXPO and DXWorldEXPO have presented a rock star faculty as well as showcased hundreds of sponsors and exhibitors! In this blog post, we provide 7 tips on how, as part of our world-class faculty, you can deliver one of the most popular sessions at our events. But before reading...
DSR is a supplier of project management, consultancy services and IT solutions that increase effectiveness of a company's operations in the production sector. The company combines in-depth knowledge of international companies with expert knowledge utilising IT tools that support manufacturing and distribution processes. DSR ensures optimization and integration of internal processes which is necessary for companies to grow rapidly. The rapid growth is possible thanks, to specialized services an...
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...