Server Shipments, Revenue Suffer Double-Digit DeclinesServer Shipments, Revenue Suffer Double-Digit Declines

Worldwide server shipments and revenue fell by double digits in the fourth quarter of last year, as the economic slowdown took its toll on the top five vendors' sales of computer systems that run business applications, a market research firm said Tuesday.

Shipments fell 11.7% in the quarter compared with the same period a year ago, while revenue dropped 15.1%, Gartner said. The top five vendors based on worldwide revenue all experienced a decline in sales.

"The weakening economic environment had a deep impact on server market revenues in the fourth quarter as companies put a hold on spending across most market segments," Gartner researcher Heeral Kota said in a statement. “Almost all segments exhibited similar behavior as users sought to reduce costs and spending, deferring projects where possible."

Blade servers was one of the few segments to show any growth in the quarter, Gartner said. Unix servers, on the other hand, fell by 10.5% in shipments and 13.7% in revenue.

Of the top five vendors in terms of revenue, IBM held on to the No. 1 spot, but suffered the biggest decline at 17.4%. The only area of IBM's business to grow year to year was System Z, which continued to benefit from efforts IBM has made to refresh the platform, Gartner said.

The top five vendors in terms of revenue, along with their revenue drops for the quarter, were IBM, 17.4%; Hewlett-Packard, 10%; Dell, 11.2%; Sun Microsystems, 14.9%; and Fujitsu/Fujitsu Siemens, 9%.

HP remained the leading vendor in terms of shipments, despite a decline of 1.6%. Of the top 10 vendors, only NEC, Lenovo, and Dawning did not have shipment declines.

For the full year, the numbers were not as bad. The dismal second half of the year sparked by the economic meltdown was offset by a fairly strong first half. Consequently, global server shipments increased 2.6% over 2007, while revenue dropped 4.1%.

The outlook for this year, however, is not promising. The pattern of the fourth quarter is a better indication of server sales in 2009 than 2008 as a whole.

"The continued weak economic environment will cause users to be extremely cautious with levels of expenditure which will make for a particularly challenging environment for vendors," Kota said. "The server market already has high levels of vendor consolidation but the conditions expected during 2009 will increase the threat of further consolidation."

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