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Server Market Took a Dive in Q1

The worldwide server market reached a new low in the first quarter, according to reports by IDC and Gartner.

The analysis was a bit more grim in IDC's report, released on Wednesday. The Framingham, Mass.-based research firm found that server revenues decreased by 7.7 percent in the first quarter of 2013 compared with the same period in 2012. Total server sales were $10.9 billion, down from $11.8 billion. Server unit shipments decreased by nearly 4 percent to 1.9 million units.

The quarter wasn't kind to market leaders HP and IBM, which showed revenue declines of 14.8 percent and 13.4 percent, respectively.

Gartner's analysis, released a day earlier, found that revenues had decreased 5 percent to $11.8 billion from $12.4 billion and shipments decreased a little less than 1 percent to 2.3 million units. Gartner's reckoning put IBM, rather than HP, as the market revenue leader, although the Stamford, Conn.-based market research firm reported nearly the same revenue declines for both server makers as reported by IDC.

The hardest-hit company in percentage terms was Oracle with a revenue decrease of either 26 percent (IDC) or 27 percent (Gartner).

Some vendors managed to execute well, despite the brutal market. Relative server-market newcomer Cisco had soaring revenues, with growth of 35 percent to $450 million for the quarter, according to IDC. Cisco's performance in the quarter landed it a three-way tie for fourth place in the global server market, along with Fujitsu and the fast-dropping Oracle.

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Dell also saw growth in the quarter, with a server revenue increase of 10 percent, according to IDC, or 14 percent, according to Gartner. Both analyst firms put Dell's market share at 18 percent. The gain for the No. 3 worldwide server vendor, combined with the sizable drops by IBM and HP, put Dell in a much closer third place than it was a year ago. It will be interesting to see if Dell can continue to execute amid the corporate ownership turmoil of the second quarter.

The Windows Server operating system segment of the server market largely held steady for the quarter. IDC estimated that Windows Server hardware revenue decreased 4 percent to $5.7 billion. However, even with that drop, the platform picked up 1.9 points of market share to reach 52.2 percent.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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