SINGAPORE: IDC's Asia/Pacific Quarterly Enterprise Server Tracker results for Q4 2008 show that server shipments in Asia/Pacific (excluding Japan) plummeted 4.6 percent year-on-year after 25 consecutive quarters of strong growth since Q2 2002.

The decline in server spending in Q4 2008 was even more dramatic. It contracted double digit for the second consecutive quarter that dragged the total spending for the full year 2008 down by 4.9 percent. The malaise of the economic and financial crisis in the US and Europe quickly spread across the Asia/Pacific region causing a debilitating slowdown in server spending in Q4 2008 with almost every country witnessing steep double digit declines, with the exception of the PRC, Thailand and Vietnam that registered modest single digit declines on an annual basis.

Rajnish Arora, director, Asia/Pacific Enterprise Servers & Workstations Research, IDC, said: "It was an absolutely nerve wrecking quarter when six of the top seven markets witnessed almost a third of server spending plunge on a year-on-year basis. The modest, single-digit decline in server spending in 2H 2008 in the PRC was expected after an astounding 30 percent surge in 2H 2007 underpinned by massive infrastructure buildout in the run up to the Olympics."

"The resiliency of the Singapore server market seemed like a mirage in Q4 2008 with shipments plunging 19.6 percent year-on-year after two consecutive quarters of healthy double-digit increases since Q2 2008," said Rajnish. "Spending on non-x86 servers, which are typically used for running mission critical core-business applications, sharply decelerated to 34 percent decline in Q4 2008 compared with 23.1 percent drop in Q3 2008."

"Hong Kong which has a very large concentration of global and regional financial services companies, took the brunt of the financial services sector meltdown with server spending contracting an eye-popping 52 percent in Q4 2008," said Rajnish. "Server spending in Hong Kong declined the most among the 14 markets in Q4 2008 year-on-year. This resulted in Hong Kong becoming the 7th largest server market in the region in Q4 2008 versus the 5th position it held in Q4 2007."

Figure 1

From a platform perspective, the non-x86 (RISC and EPIC) Unix was one of the few positive spots with spending declining a sliver 1.4 percent in 2008 due to 7 percent increases each in the PRC and India. x86 Blade server shipments crossed a key milestone in 2008 with more than 100K units sold across Asia/Pacific (excluding Japan). Overall, x86 server shipments grew at a fairly subdued 7.9 percent in 2008, which is a sharp contrast to the strong double-digit increases in excess of 15 percent for the past five consecutive years since 2003.

In revenue terms, x86 server spending declined 4.3 percent for the full year 2008 after growing for the past six consecutive years.

IBM remained well perched in the #1 position capturing 37 percent revenue share of the Asia/Pacific (excluding Japan) server market in 2008. HP remained the dominant vendor in unit shipment terms in 2008, capturing 30.7 percent share underpinned by its strength in the x86 server segment. Among the top five vendors, Dell was the fastest growing with unit shipments increasing an impressive 14.2 percent in 2008. Sun’s growing presence in the rapidly expanding x86 server market, failed to offset the slowdown in its business from the non-x86 Unix server segment.

Figure 2