Gartner: Server shipments and revenue experience huge declines in Q4 2008

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.

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. 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.

In server shipments, Hewlett-Packard remained the worldwide leader for the fourth quarter of 2008 (see Table 2) in spite of a shipment decline of 1.6 percent for the year. The ProLiant brand showed a slight decline in shipments while all of its other brands fell in the fourth quarter 2008 compared to the fourth quarter of 2007.

Of the top 10 vendors in server shipments worldwide, only 3 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.

For the full year of 2008, there was a dramatic swing from fairly strong results in the first half of 2008 to a severe decline in both shipments and revenue in the second half as the intensity of the economic downturn began to impact demand. Consequently worldwide server shipments increased 2.6 percent from 2007, while worldwide server revenue declined 4.1 percent in 2008.

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