Server Market Is "In Decline"Well, Sort Of, MaybeServer Market Is "In Decline"Well, Sort Of, Maybe

But anyway you look at itand there are plenty of waysit's a buyers' market.Market research firm IDC reports that, worldwide, server market revenue declined 5.2% year-over-year in 3Q08, and that was the largest quarterly decline the server market had seen since the dark days at the end of 2002.

But that was revenue experienced by the vendors. The number of units shipped actually rose during that same period, at a rate of 2.8% year-over-year. But IDC said that was the slowest increase in server shipments since 4Q06.

(Gartner, a competing market research firm, reported slightly different figures, showing that worldwide server revenue declined 5.4% during 3Q08, while shipments rose 4.4% year-over-year. The overall trend, in other words, is the same.)

Drilling down in the IDC figures, the worst news was in the x86 server market, which represents most of the SMB market. IDC said that x86 server revenue declined 6.6%, which was the largest quarterly decline the segment had seen in more than six years. In the US, revenue fell 12.2%, the biggest drop since 2001. Again, that was revenue -- the number of units shipped worldwide actually rose 4.0%, although that figure also represented a slump in the growth rate.

Obviously, people are still buying more servers. The problem is that they are slowing the rate at which they are buying more servers, and they're paying less for those servers. The situation could be a lot worse -- pundits could be trading predictions about which vendor will fold next. That's not happening. At worst, the vendors might ease up on the pace of technological development in the server market if those efforts aren't seen to pay off.

For those who follow vendor rankings (and many people do), in the x86 market Hewlett-Packard led with 36.9% of the market in terms of revenue, while Dell held the number two slot at 21.8%, IDC reported. But they both experienced declines in x86 factory revenue, as did IBM.

Microsoft Windows systems represented about 40.8% of server operating system revenue in the quarter. UNIX servers experienced a revenue decline of 8.4%, and amounted to 29.7% of market revenue. Linux were presented 14%, having experienced a decline of 2.5%.

On the other hand, the blade market saw double-digit growth in sales volume, with factory revenue growing almost 30%, reported IDC.

Apparently, blade technology is still catching on.

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