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Server Market Takes a Dive in 2008

A new report from IDC, announced on Wednesday, suggested that the global economic malaise has already chipped away at the enterprise IT server market.

The report, "IDC's Worldwide Quarterly Server Tracker," found that factory revenue for the worldwide server market decreased 3 percent in 2008 compared with the previous year's result. Vendors such as Dell, Fujitsu, HP, IBM, Sun Microsystems and others took in $53.3 billion in 2008 compared with $55.1 billion in 2007.

Despite the revenue decrease in 2008, demand for servers was actually up. Worldwide server shipments grew year-over-year to reach 8.1 million units, a new high -- even with the increasing use of server virtualization technologies.

A quarterly snapshot of the server market provided a far grimmer picture of the market's health in IDC's report. Server factory revenue in the fourth quarter of 2008 was $13.5 billion, representing a 14 percent decrease over the previous year's 4Q result.

That 4Q decline represents the sharpest decrease yet seen for the server market since the dot-com bust of seven years ago, explained Matthew Eastwood, IDC's group vice president of the Enterprise Platforms Group.

"It now appears the slowdown will worsen before any improvement is seen in late 2009 or early 2010," he said in a prepared statement. He expected IT groups would attempt to stretch their dollars using virtualization and other server consolidation techniques.

The leading server vendor in terms of factory revenue market share in 4Q 2008 was IBM with 36.3 percent, according to the report. Next in line was HP with 29.0 percent factory revenue market share for the quarter, and Dell, which had a 10.6 percent stake.

In terms of software, UNIX brought in $4.9 billion factory revenue for the quarter compared with Windows Server, which brought in $4.8 billion. Linux trailed, bringing in $1.8 billion factory revenue for the quarter, according to the report.

The x86 server market decreased 17 percent in the quarter. Sun was the only server vendor experiencing positive revenue growth for the quarter in the x86 market. However, when users do deploy x86 servers, they appear to favor blades technology. Blades x86 shipments grew 8.8 percent in 4Q 2008 over the previous year's quarter.

To get more information on IDC's Worldwide Quarterly Server Tracker report, go here.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.

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