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IDC: Worldwide Server Market Down in Q2

Worldwide server market revenues decreased 4.8 percent year-over-year in Q2 2012, according to analysis issued by IDC this week.

The revenue dip marks the third consecutive quarter of year-over-year revenue declines for the server market, according to the research and consulting company, which pulled data from its Worldwide Quarterly Server Tracker reports.

IDC noted that the contrast seen this year stems, in part, from the more positive technology refresh cycles that occurred in 2010 and 2011, plus economic uncertainty.

The market is "working its way through a number of technology transitions impacting customer demand for x86, Unix and mainframe-class systems," said Matt Eastwood, group vice president and general manager for enterprise platforms at IDC, in a released statement. "Economic uncertainty is weighing on the market and the sales cycle is lengthening."

Unix servers and non-x86 servers had the poorest showing this quarter. Unix server revenue declined 20.3 percent year over year. Non-x86 server revenue declined 19.4 percent year over year.

"The Unix server market is in between generation refresh cycles, and continues to be hampered by workload consolidation and migration to other platforms," explained Kuba Stolarski, research manager for enterprise servers at IDC. "IDC expects the Unix market to stabilize over the next few years and remain a smaller, specialized segment of the overall server market."

While the Unix and non-x86 markets struggled, bladed servers and Linux servers saw improved demand. IDC attributes the increase of Linux hardware revenue (a 1.7 percent year-over-year gain) to the growing demands of high-performance computing and cloud infrastructure deployments. Bladed server factory revenue was up 6.3 percent year over year, as were bladed server shipment numbers (up 4.1 percent from Q2 2011).

"Together, blade- and density-optimized servers grew 15 percent in annual revenue and now represent 22 percent of the market," said Jed Scaramella, research manager for enterprise servers at IDC, in a released statement. "These modular form factors are expected to continue to gain adoption, with blades targeting virtualized environments in enterprises and density-optimized servers targeting large-scale homogeneous environments in datacenters."

Hewlett-Packard Co. and IBM Corp. shared the No. 1 spot for factory revenue share this quarter, although both companies saw year-over-year factory revenue declines (of 5 percent and 8.2 percent, respectively). Dell Inc. took third place in factory revenue share, helped by a 5.9 percent revenue increase compared with Q2 2011. 

IDC saw some bright spots amid the overall Q2 server market revenue dip. Analysts pointed to the continuing strength of Linux servers and bladed servers. Demand for x86 servers was still positive, with 3.5 percent revenue growth this quarter. This x86 revenue growth reflects a trend that has held strong since 2009, in which the selling prices of x86 servers showed year-over-year increases.

Despite the Q2 setback, IDC expects increased demand as new servers hit the market.

"It is important to note that IDC believes that server demand will begin to improve in the second half of 2012 following a number of critical product refreshes which continue to be announced," Eastwood said.

About the Author

Katrina Carrasco is the associate group managing editor for the 1105 Enterprise Computing Group. She can be reached at kcarrasco@1105media.com.

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