Computer Business Review

EMEA server revenue and shipments drop in Q2

CBR Staff Writer

12:00, September 4 2013

HP topped the list of vendors in the region followed by IBM, Dell, Oracle and Fujitsu.

The server revenue in Europe, Middle East and Africa (EMEA) experienced a 3.3% drop during the second quarter of 2013 to $2.9bn, representing a seventh consecutive quarterly decline since the fourth quarter of 2011, according to a new report.

IDC's latest EMEA Server Tracker revealed that server shipments reached 483,000 units during the quarter, a 4.7% decline compared to the corresponding quarter in 2012.

The report also revealed that the quarterly server sales rose 6.8% in terms of dollars and 8% in Euros.

IDC EMEA Enterprise Server Group research manager, Giorgio Nebuloni, said that with new products and refreshes coming up in 4Q13, x86 server spending has proceeded at a slower pace in the quarter, especially in the volume SMB sector.

"Vendors are battling for share in that part of the market -- typically distribution-driven -- as new entrants continue applying pressure on established players," Nebuloni said.

"Stabilisation and some growth in x86 spending is expected for 2014, when local cloud service projects will combine with broader refreshes and a less negative macroeconomic scenario."

EMEA performance also balanced favourably to the global server market, which reported 6.2% drop in overall revenues.

During Q2, x86 server revenue dropped 4.5% to $2.1bn and reported 71.3% rise in sales, while the non-x86 server revenue declined just by 0.1%.

Sales of volume and midrange servers declined 6.4% and 5.6% respectively, while sales of high-end systems rose 7.5% in Q2.

IDC EMEA Enterprise Server Group senior research analyst Beatriz Valle said that mainframe performance enjoyed quite an uptick this quarter, driven by strong demand in Western Europe, particularly the UK, France, and Germany, as well as pockets in other countries of EMEA, such as South Africa and Poland.

"This trend was driven by demand for refreshes on previous-generation mainframes. With the release of the zEC12 in 3Q12, focusing on security and analytics, IBM introduced important updates to keep the platform relevant," Valle said.

"Mainframes are increasingly being deployed on Linux operating systems and high-availability needs remain a primary market engine in some industries."

The research firm also revealed that the Central and Eastern Europe, Middle East and Africa [CEMA] reported negative growth, with server revenue plunging by 10.5%.

IDC CEMA research manager Jiri Helebrand said the Central and Eastern Europe [CEE] subregion was down 20.4% to $363.42m.

"Continued weakness in the Russian market is weighing heavily on the CEE region, which saw the weakest performance over the past three years," Helebrand said.

"An increase in demand was seen in Poland, Czech Republic, and Hungary thanks to several large upgrades of existing server infrastructure in the financial sector.

"The Middle East and Africa [MEA] subregion showed resilience despite the geopolitical tension, and server sales increased 2.3% year on year to $358.54 million.

"A focus on technological transformation and improving IT infrastructure is supporting server demand in countries such as Kenya, Nigeria, and Pakistan, which are all growing at double-digit rates."

However, the strong demand in the government and financial sectors resulted in double digit growth for the Turkish server market.

During the quarter, EMEA reported a 2.4% decline in blade revenues to $574m, which is said to be less when compared to previous quarters.

Revenues generated by density optimised servers rose 68.0% year-on-year, while accounting for $98m of revenue.

IDC EMEA Enterprise Server Group research analyst, Andreas Olah, said that the share of modular server shipments in EMEA increased from 18.9% in 2Q12 to 20.5% in 2Q13.

"While the share of blade shipments remained stable, the moderate growth in the density optimised segment has been driven by large enterprises, the public sector, and cloud service providers' hyperscale datacentre upgrades in Western Europe, with the highest increase seen in France, the Netherlands, and the Nordics," Olah said.

"Server density is increasing in the blade and density optimised segment, which is driven by the need for lower power consumption and less datacentre floor space required while maintaining performance.

"While modular shipments grew annually in double to triple digits in France, Spain, the U.K., Benelux, and the Nordics, there was a temporary decline in Germany, Austria, and Ireland, a trend in line with an overall drop in server shipments in these countries."

HP topped the list of server vendors in the region followed by IBM, Dell, Oracle and Fujitsu.


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