Indian server market up 7pc in 2Q09

BANGALORE, INDIA: Indian server market was poised at $141.5 million during the second quarter of 2009, registering an annual decline of 31.6 percent this year, according to Gartner, Inc.

Naveen Mishra, senior research analyst, Gartner, said: “The Indian market managed to post a sequential growth of 7.3 percent this quarter, which can be interpreted as early signs of initial recovery in the hardware market. Almost 47 percent of the revenue was accounted by the x86 technology this quarter.”

This improvement in the customer demand this quarter has been primarily driven by x86 technology which grew around 11 percent. Consolidation efforts specially virtualization has helped this market traction coupled with the recent product launches by OEM’s using the newly released Nehalem processors across the country.

This further drove the shipment of feature rich highly configured x86 servers during the second quarter of the year. Interestingly, the market also witnessed a significant increase in the Average Selling prices of x86 servers, which boosted the revenue. Key x86 server vendors like HP, IBM and Dell contributed significantly towards the momentum this quarter. 

The non x86 category (Itanium, RISC and others) also saw a marginal improvement of 5.2% in terms of revenue, quarter over quarter. Itanium and RISC were the key contributor towards this activity, which was primarily led by HP, IBM and Sun.

The market demand was quite broad this quarter. Especially segments like telecom, government and banks were the key contributors to the majority of the business. IT Services, manufacturing showed signs of demand this quarter, which could be considered as a positive indication for the upcoming quarters.

APAC server shipments decline in 2Q09

In the second quarter of 2009, Asia Pacific continued its downward trend in server shipments with 17.2 percent year on year decline, with shipments totaling 323,388 units.

Server vendor revenue for the second quarter reached $1.71 billion, down 15 percent compared to the same period a year ago.

Generally, constrained server spending remained in the background for most medium and large enterprises in Asia Pacific, although there was growth in units shipped (11 percent) and revenue (4.6 percent) over the previous quarter. The sequential growth came particularly from Australia, benefiting from government’s stimulus program. Australia had slight revenue decline of 2.5 percent year-on-year, while it doubled from 1Q 2009. Gartner expects the government’s stimulus plan will continue to inspire business confidence in Australia and drive further server demand in the second half of 2009.

In other developed countries, weak server demand generally continued to persist when compared to the same quarter of 2008, with the biggest revenue declines recorded in Singapore (-36.8 percent), Hong Kong (-48.3 percent), Taiwan (-33.7 percent) and Korea (-30.7 percent).

Similar to Australia, all these countries saw growth over the previous quarter in unit shipment and revenue, except Singapore. A combination of seasonal low server spending in the second quarter and a still-cautious level of business confidence led to further contraction quarter on quarter in server shipments (-5.2 percent) and revenue (-38.4 percent) in Singapore. In China, the peak in purchasing in 2Q08 led to a drop of -2.5 percent year-on-year in the second quarter of 2009.

Shipments of x86 servers declined 16.6 percent year-on-year. At the same time, revenue declined 12.2 percent, accounting for 52 percent of the server market.

Mainframes had another strong quarter with 31.8 percent growth year-on-year, thanks to successes mainly in Australia and the South Korean financial sector.  On the other hand RISC/IA 64 platforms declined at 23 percent over the same period last year.                                                                                                      

Shipments of blade servers (including x86 blades and RISC/IA-64 blades) represented 12 percent of total units and reported 15.1 percent year-over-year growth during the second quarter of 2009.

All major server vendors experienced year-on-year revenue decline, as shown in Table 1, except Dell. HP retained the leading position in server shipments with 29 percent market share with majority of them in the x86 platform.

In revenue terms, IBM maintained its first position by controlling 39 percent of total revenue in 2Q09. Although IBM saw strong growth of mainframes this quarter, its Power Systems continued to suffer under the impact of global downturn and reported a double-digit revenue decline during the quarter. 

Dell increased its share of shipments to 22.9 percent in the second quarter of 2009, however continued to feel the pressure of the weak economy as volume fell 12.3 percent year-on-year. Dell had a better picture in terms of revenue during the quarter as it continued to take advantage of its direct sales model that appeared to help in increasing its product’s selling price.

Because of the uncertainty surrounding the effect of Oracle’s purchase of Sun Microsystems, the latter’s overall server revenue went down 33 percent year-over-year while its revenue share went down 3 points to 9 percent in the second quarter of 2009.