STAMFORD, Conn., June 1, 2009 View All Press Releases

Gartner Says Worldwide Server Revenue and Shipments Posted Historically Low Declines in First Quarter of 2009

Worldwide server revenue declined 24 percent in the first quarter of 2009, and shipments dropped 24.2 percent, compared to the first quarter of 2008, according to Gartner, Inc. These were the most significant declines the server industry has experienced on a year-on-year basis.

“The significant decline that occurred in the fourth quarter of last year has extended into the beginning of this year,” said Jeffrey Hewitt, research vice president at Gartner. “While this was not unexpected, the severity of the decline was greater than predicted on a worldwide level.”

“The ongoing weakness of the global economy affected all server segments. x86-based servers fell 23.9 percent in units and 27.1 percent in revenues. UNIX servers also were impacted in quarterly results with drops of 31.3 percent in units and 20.4 percent in vendor revenues,” Mr. Hewitt said.

The server market was negatively impacted in all geographic regions. Asia/Pacific felt the least downward pressure in terms of revenue and units with a 13.5 percent and 12.7 percent declines, respectively. Both the U.S. and Western Europe had shipment declines of almost 27 percent for the quarter. In server vendor revenues, the U.S. dropped 21.2 percent and Western Europe fell 33.8 percent.

Of the top five global vendors, IBM, HP, Dell, Sun and Fujitsu/Fujitsu Siemens all had double-digit revenue declines for the first quarter of 2009. IBM continued to lead the worldwide server market based on revenue (see Table 1)--the company posted just over $3 billion in server revenue, and its market share reached 30.7 percent in the first quarter of 2009. This share was up 1.4 percent year-on-year. While IBM retained the No. 1 position, it sustained a 20.4 percent revenue decline, with all of its server brands posting year-on-year decreases.

Table 1
Worldwide: Server Vendor Revenue Estimates, 1Q09 (U.S. Dollars)

Company	1Q09 Revenue	1Q09 Market Share (%)	1Q08 Revenue	1Q08 Market Share (%)	1Q08-1Q09 Growth (%)
IBM	3,116,339,359	30.7	3,912,784,267	29.3	-20.4
Hewlett-Packard	2,923,706,928	28.8	3,938,570,388	29.5	-25.8
Dell Inc.	1,235,116,170	12.2	1,641,112,202	12.3	-24.7
Sun Microsystems	975,540,776	9.6	1,318,044,370	9.9	-26.0
Fujitsu/Fujitsu Siemens	598,529,005	5.9	732,355,158	5.5	-18.3
Other Vendors	1,309,665,442	12.9	1,818,497,899	13.6	-28.0
Total	10,158,897,680	100.0	13,361,364,284	100.0	-24.0

Source: Gartner (June 2009)

Of the top five vendors in server shipments worldwide, all posted double-digit decreases in units for the first quarter. Hewlett-Packard remained the worldwide leader for the first quarter of 2009 (see Table 2) in spite of a shipment decline of 22.3 percent for the year. All of HP’s server brands had a year-on-year decline for the period.

The weak economic environment also impacted overall x86 server demand as x86 server shipments fell by 23.9 percent and revenue dropped by 27.1 percent for the first quarter of 2009. The least impacted server segment was x86 blade severs which fell 20.6 percent in units and 19.5 percent in vendor revenue for the first quarter. All blade server shipments declined 19.1 percent, and revenue decreased 13.8 percent.

Table 2
Worldwide: Server Vendor Shipment Estimates, 1Q09 (Units)

Company	1Q09 Shipment	1Q09 Market Share (%)	1Q08 Shipment	1Q08 Market Share (%)	1Q08-1Q09 Growth (%)
Hewlett-Packard	530,849	30.8	683,433	30.1	-22.3
Dell Inc.	382,385	22.2	516,499	22.7	-26.0
IBM	230,984	13.4	302,057	13.3	-23.5
Sun Microsystems	60,294	3.5	84,313	3.7	-28.5
Fujitsu/Fujitsu Siemens	59,029	3.4	78,867	3.5	-25.2
Other Vendors	458,161	26.6	605,883	26.7	-24.4
Total	1,721,702	100.0	2,271,052	100.0	-24.2

Source: Gartner (June 2009)

“The outlook for 2009 suggests that it will be a weak year on the whole in the server space, and that from a yearly standpoint, the global server market is unlikely to return to a position of growth until 2010,” said Mr. Hewitt.

In Europe, the Middle East and Africa (EMEA), server shipments totalled just over 500,000 units in the first quarter of 2009, a decline of 29 percent from the same period last year (see Table 4). Server revenue totalled $3 billion in the first quarter of 2009, a decline of 34 percent over the same quarter last year (see Table 3).

"Economic weakness continued to negatively affect the EMEA server market in the first quarter of 2009, with all segments of the market declining," said Errol Rasit, senior research analyst at Gartner. The quarter exhibited the worst year-on-year shipment and revenue declines for more than 15 years. Eastern Europe, a region that has previously shown positive performance during slowing spending patterns exhibited the largest decline in EMEA, with revenue decreasing by almost 50 percent in the first quarter of 2009.

In the x86 market, total volumes in EMEA declined 29 percent compared to the first quarter of 2008. The declining performance in the x86 segment in EMEA was highlighted by the first quarter of year-on-year decline in blade servers since they were introduced. Of the top five vendors, Sun’s shipments decreased the slowest at 7.4 percent, although Sun only accounted for 2.4 percent of total server shipments. HP’s shipments dropped 24.7 percent. Dell, IBM and Fujitsu each declined more than 30 percent, representing the wide-spread slowdown in demand for x86 servers.

Following a weak 2008, RISC and Itanium UNIX revenues declined 31 percent in the first quarter of 2009. Of the top five vendors in this segment, Group Bull resisted the trend and showed a 24 per cent year-on-year growth, driven by strong public sector demand that helped the vendor mitigate weakness seen elsewhere. Sun, ranked No. 2 in this segment, saw its market share decline 39 percent year-on-year. The vendor suffered marginal impact from uncertainty of future ownership changes at the end of the first quarter of 2009. Fujitsu Siemens Computers’ result was the weakest in this segment with a decline of 77 percent in the first quarter of 2009. The vendor continued to be affected by its organizational change that finalised in the quarter to emerge as Fujitsu.

Table 3
EMEA: Server Vendor Revenue Estimates, 1Q09 (U.S. Dollars)

Company	1Q09 Revenue	1Q09 Market Share (%)	1Q08 Revenue	1Q08 Market Share (%)	1Q09-1Q08 Growth (%)
Hewlett-Packard	1,083,593,035	35.9	1,620,617,017	35.3	-33.1
IBM	876,236,012	29.0	1,297,161,537	28.3	-32.4
Sun	341,945,891	11.3	537,402,995	11.7	-36.4
Dell	290,108,343	9.6	467,055,194	10.2	-37.9
Fujitsu/Fujitsu Siemens	199,814,235	6.6	371,790,976	8.1	-46.3
Other Vendors	229,798,145	7.6	295,995,452	6.4	-22.4
Total	3,021,495,661	100.0	4,590,023,170	100.0	-34.2

Source: Gartner (June 2009)

In server shipments, HP maintained its No. 1 position and increased its market share by 2.5 percent compared to the first quarter of 2008. In a declining market, HP’s year-on-year growth rate is not decreasing as fast as its competitors as a result of improvements made in its x86 business over the past few years. In addition, HP’s breadth of coverage strengthens its position to exploit market share’s gains in the future.

Table 4
EMEA: Server Vendor Shipment Estimates, 1Q09 (Units)

Company	1Q09 Shipment	1Q09 Market Share (%)	1Q08 Shipment	1Q08 Market Share (%)	1Q09-1Q08 Growth (%)
Hewlett-Packard	218,296	43.0	289,687	40.5	-24.6
Dell	86,828	17.1	136,749	19.1	-36.5
IBM	63,948	12.6	94,681	13.2	-32.5
Fujitsu/Fujitsu Siemens	34,243	6.8	52,062	7.3	-34.2
Sun	21,404	4.2	29,639	4.1	-27.8
Other Vendors	82,457	16.3	111,920	15.7	-26.3
Total	507,177	100.0	714,739	100.0	-29.0

Source: Gartner (June 2009)

“We foresee that the second quarter of 2009 will exhibit a similar level of decline and it’s unlikely that the server market in EMEA will show growth before 2010,” concluded Mr. Rasit.

Gartner YouTube Channel
Additional comments regarding the first quarter results for the server market are available on the Gartner YouTube channel at http://www.youtube.com/watch?v=BL87caWFNx4. Additional Gartner videos are available at http://www.youtube.com/user/Gartnervideo.

More information is available to subscribers of Gartner Dataquest’s Servers Quarterly Statistics Worldwide program. This program provides worldwide market size and share data by vendor revenue and unit shipments. Segments include: region, vendor, vendor brand, sub brand, CPU type, CPU group, Max CPU, platform, price band, operating systems and distribution channels.

 

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