Server Demand to Slow in the Back Half of 2011

Published:2011/8/29 2:42:00 Author:Phyllis From:SeekIC

According to the market research firm International Data Corp (IDC), the demand for servers remained high in the second quarter, but the situation is seem to change due to the global weakening macroeconomic conditions.

The worldwide server market factory revenue in the second quarter reached $13.2 billion and increased 17.9 percent than the same period of 2010, marked the sixth consecutive quarter of year-on-year sales growth. As demand continued to improve around the world, the second quarter of 2011 witnessed the sixth consecutive quarter of year-over-year revenue growth for the server market. Second quarter server unit shipments were the second highest total ever reported for a second quarter of any year as it increased 8.5 percent year-over-year, reaching 2.1 million units. The server market can be divided into three parts: volume, midrange enterprise and high-end enterprise.

Volume systems experienced a 16.6 percent year-over-year revenue increase in the second quarter. It is the seventh consecutive quarter of positive growth for the segment. Midrange enterprise demand improved for the fourth time in the past five quarters, with a 16.7 percent year-over-year sales increase. The improving market conditions also extended to the high-end enterprise segment, as quarterly revenue increased 22.8 percent compared to the second quarter of 2010. The second quarter marked the second consecutive quarter that all three segments of the server market have experienced a year-over-year revenue increase.

The group vice president for enterprise platforms at IDC said in a statement that server market growth accelerated in the second quarter and experienced its highest reported second quarter revenue in three years. The second quarter also marked the fifth consecutive quarter with double-digit year-over-year revenue growth.

"Attention has already turned to the market outlook for the second half of the year. IDC believes that weakening macroeconomic conditions around the world will serve to moderate demand for new servers later this year," said IDC Enterprise Platforms group vice president Matt Eastwood.

X86 servers continue to drive the majority of the market, and x86 revenues are consistently outperforming unit growth on a quarterly basis.

This market trend will continue as customers look at consolidating more workloads onto servers that aren’t configured with increased memory attach rates and higher-priced processors to provide systems capable of improving performance and efficiency.

There were few surprises when it came to the top-placed vendors; IBM and HP continued their sector dominance, accounting for 30.5% and 29.8% of the market respectively. Third-placed Dell took market share of 13.8%, while Oracle and Fujitsu rounded out the top five with 7.25 and 6.5% of the market.

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