Gartner: Server Market Shows Signs of Stabilization

"It is important to put the yearly declines into perspective," said Jeffrey Hewitt, Research Vice President, Gartner. "Looking at the third quarter results from the sequential perspective, they showed an increase of 13.8 percent in shipments and 10.2 percent in revenues when compared to the second quarter of this year. That suggests that the market as a whole is showing signs of stabilization as we move toward the end of 2009," he said

IBM held the revenue lead in the worldwide server market for the quarter. IBM's overall revenue share lead over second-place HP was 1.5 percent for the quarter. Four of the top 5 vendors posted double-digit declines in revenue year over year. However, all of the top tier vendors experienced sequential revenue growth, except for Sun Microsystems.

In server shipments, Hewlett-Packard retained its worldwide server shipment lead, as its market share reached 32.1 percent in the third quarter of 2009. Dell maintained the No. 2 ranking as its share totaled 22.8 percent. HP's shipment performance was driven primarily by its ProLiant brands.

The overall Indian server market, however, totaled at around $118Mn during this quarter registering a year-on-year decline of 28.3 percent. This market decline could be partly contributed to the sluggish economic situation coupled with seasonality observed around this quarter. Gartner expects that the OND quarter should be much better primarily fuelled by a lot of pent up demand coupled with year end buying. Overall, Hewlett Packard emerged as the market leader followed by IBM and Sun Microsystems. HP and IBM were the worst affected vendors due to the limited market server demand during this quarter in India.

x86 servers accounted for around 59 percent of the market revenue leading to a revenue increase of 4.4 percent, as compared to last quarter. This further suggests that India CIO's have started selective purchase of servers, which can be considered as early signal of economic recovery. India companies have undertaken a lot server refresh and consolidation projects. Virtualization has been a key driver for such deployments in large as well as mid-market territory. On the other side, non x86 segment of the server witnessed a sequential decline of 35.9 percent this quarter. Some of the large projects seem to be deferred for the next quarter, stated Gartner.