U.S. Economic Slowdown Causes Worldwide Server Revenue Decline

Worldwide server growth came to a screeching halt in the first quarter of 2001, with server factory revenue declining 4 percent, from $13.8 billion in Q1 2000 to $13.3 billion in Q1 2001, according to the Worldwide Quarterly Server Tracker from International Data Corp. (IDC).

The slowing U.S. economy is being cited as the cause for the worldwide slowdown. U.S. server revenue plummeted 16 percent, from $5.2 billion in Q1 2000 to $4.4 billion in Q1 2001, thus negating growth in other regions.

According to IDC, server factory revenue for Western Europe increased 16 percent in Q1 2001. Growth in the Asia-Pacific region, excluding Japan, was 12 percent. (The server market in Japan was impacted by a cutback in government spending and the declining value of the yen; revenue decreased 12 percent from Q1 2000.)

“Though the decline in the U.S. market was quite severe, strong growth in other parts of the world such as Western Europe and Asia/Pacific kept worldwide damage in check,” said Vernon Turner, IDC’s vice president of Global Enterprise Server Solutions.

Despite declining revenue in the overall server market, the rack-optimized segment demonstrated rapid growth. Shipments for this market segment jumped almost 138 percent, and it exhibited revenue growth of 87 percent. In contrast, revenue in the nonrack-optimized server market fell 9 percent.

In terms of vendor performance, IBM and Dell were the only top-five players to increase their revenue in the worldwide market, demonstrating 13 percent and 21 percent jumps, respectively. IDC’s rankings of the top-five vendors in the worldwide server market based on revenue share are: IBM (with a 25 percent market share), Hewlett-Packard (with a 16 percent market share), Sun Microsystems (with a 15.4 percent market share), Compaq (with a 14.7 percent market share), and Dell (with a 7 percent market share).

In the U.S. market, Dell was the only top-five vendor to increase its revenue, growing 12 percent. According to the survey results, the top five U.S. vendors by revenue share are IBM (with a 22 percent market share), Sun Microsystems (with an 18 percent market share), Hewlett-Packard (with a 16.3 percent market share), Compaq (with a 15.9 percent market share), and Dell (with a 12 percent market share).

Reprinted from internet.com’s ServerWatch.