STAMFORD, CONN, USA: Worldwide server shipments in the fourth quarter of 2008 declined 11.7 percent decline from the fourth quarter of 2007, while server revenue decreased 15.1 percent, according to Gartner, Inc.

Heeral Kota, senior research analyst, Gartner, said: “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. Almost all segments exhibited similar behavior as users sought to reduce costs and spending, deferring projects where possible. Blade servers were one of the few segments to achieve any growth at all in this challenging environment. Unix servers on the other hand fell for the fourth quarter at 10.5 percent in shipments and 13.7 percent in revenue for the year.”

From a geographic perspective, all regions apart from Japan saw a fall in revenue. While Japan had a 4.7 percent revenue increase, Europe, Middle East, and Africa (EMEA) suffered the worst decline with revenues falling by 20.6 percent. Even the emerging regions of Latin America and Asia Pac suffered with declines of 12.5 percent and 14.8 percent, respectively. North America server revenue declined 14.6 percent. In addition to weak demand, strong exchange rate fluctuations also had a sizeable impact on server market performance, particularly in the Eurozone

The top five vendors based on worldwide server revenue all experienced a decline in revenue in the fourth quarter of 2008. IBM continued to lead the worldwide server market based on revenue (see Table 1). The company ended the year with just over $4 billion in revenue, with its worldwide market share totaling 33.4 percent in the fourth quarter of 2008. While IBM retained the No.1 spot, it sustained a 17.4 percent revenue decline, with most parts of the business declining. The only area of IBM’s business to grow year-on-year was system Z, which continues to benefit from the efforts IBM has made to reinvigorate this platform.

Of the top 10 vendors in server shipments worldwide, only three did not have shipment declines for the year—NEC, Lenovo and Dawning.

The weak economic environment also impacted x86 server demand as x86 server shipments fell by 11.4 percent and revenue fell by 18.1 percent for the fourth quarter of 2008. The relatively short purchasing cycle for these products mean this segment can see demand fall off particularly quickly.