IDC's EMEA Server Tracker results for 3Q07 revealed continued positive growth in the EMEA server market, but at a much more abated rate of 3% in factory revenue and 10% in units. Revenue still hovered above the $4 billion mark, representing more than 600,000 units sold across the region. However, Western Europe showed signs of significant buying behavior changes triggered by the availability of technologies in the x86 market. This translated into slowing demand with revenues declining by 1%, despite shipments increasing by 8% over the same quarter last year.
Commenting on the increasing importance of x86 servers in the market, Nathaniel Martinez, program manager for European Enterprise Servers at IDC, said, "Volume servers continued to lead the market generating strong revenue and unit growth as European IT departments take advantage of innovations such as multi-core, virtualization, and blades to derive more efficiencies in the datacenters in terms of increased capacity, density, and power management." At the same time, vendors are focusing their offering and bundles at the SMB market which is expected to remain a driver for server market in the coming months.
The shift towards x86 has also affected average system values and revenues. Though the market continues to see more additions per server sold, this wasn't enough to forestall an overall reduction in system values. According to Beatriz Valle, research analyst at IDC, "Average selling prices of servers sold in Western Europe in 3Q07 have gone down, and this is a reflection of the trend towards x86 servers. This quarter was the first time in Western Europe that factory revenue from x86 servers outstripped the non-x86 segment. Sales of RISC-based systems, which traditionally translate into bigger profit margins, reached less than $1 billion for the first time in many years."
Showing the diversity of the market, the market of Central and Eastern Europe, Middle East & Africa behaved very differently. "Driven by demand for high-end and midrange machines in both CEE and MEA, the server market of Central and Eastern Europe, Middle East and Africa once again experienced strong growth, with revenue jumping by 22% and shipments by 19% in year-on-year comparisons," says Stefania Lorenz, research director for PCs and Systems at IDC. "The third quarter of this year exhibited strong uptake of EPIC-based systems in both regions, with revenue soaring by more than 130%. The oil & gas and telco sectors drove EPIC-based growth, although the overall economic stability in the regions was also important."
IDC Top Server Market Findings
- Revenue from volume servers grew by 12% annually in EMEA, and by 9% in Western Europe. High-end servers saw shipments increase on an annual basis, but factory revenue decreased, signaling lower average prices in the server segment priced above $ 500,000.
- Both Windows servers and Linux servers experienced annual growth in the mid-teens. Windows is now the dominant operating system for new server shipments by a considerable margin in every EMEA sub-region, and Linux servers are enjoying good revenue performance after increasing its presence in a wider variety of industries.
- Revenue growth for Unix servers was flat, but the operating system remained the second most popular. Windows server growth was mainly at the expense of z/OS and i5/OS servers, whose sales decreased by 34% and 25% respectively on an annual basis.
- Rack servers beat the pedestal form to the top spot with 47% of the total revenue in EMEA. Blades are progressively establishing themselves as a mainstream form factor and made up 8% of the total, with annual sales growth of 48% and 35% in EMEA and Western Europe respectively.
3Q07 Vendor Highlights
- HP significantly increased its market share. The vendor maintained its traditional stronghold in the x86 space, but it was a strong performance by its high-end servers, particularly the Integrity line, up by 71% annually, which tipped the balance in its favor.
- IBM lost market share in the quarter, which historically doesn't favor sales of System z and System p servers. The only family which saw growth was System x.
- Sun Microsystems held on to its market share thanks to good results for the high-end SPARC line.
- Dell's increased solutions marketing, focused segment approach, and pricing structure produced significant growth.
- Fujitsu Siemens Computers generated good growth throughout its portfolio and delivered 13% revenue growth, which translated into a small year-on-year share increase.
IDC's Server Taxonomy
IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers (servers priced less than $25,000), midrange enterprise servers ($25,000 to $499,999), and high-end enterprise servers ($500,000 or more). The revenue data presented in this release is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market-share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments. IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture.
Commenting on the increasing importance of x86 servers in the market, Nathaniel Martinez, program manager for European Enterprise Servers at IDC, said, "Volume servers continued to lead the market generating strong revenue and unit growth as European IT departments take advantage of innovations such as multi-core, virtualization, and blades to derive more efficiencies in the datacenters in terms of increased capacity, density, and power management." At the same time, vendors are focusing their offering and bundles at the SMB market which is expected to remain a driver for server market in the coming months.
The shift towards x86 has also affected average system values and revenues. Though the market continues to see more additions per server sold, this wasn't enough to forestall an overall reduction in system values. According to Beatriz Valle, research analyst at IDC, "Average selling prices of servers sold in Western Europe in 3Q07 have gone down, and this is a reflection of the trend towards x86 servers. This quarter was the first time in Western Europe that factory revenue from x86 servers outstripped the non-x86 segment. Sales of RISC-based systems, which traditionally translate into bigger profit margins, reached less than $1 billion for the first time in many years."
Showing the diversity of the market, the market of Central and Eastern Europe, Middle East & Africa behaved very differently. "Driven by demand for high-end and midrange machines in both CEE and MEA, the server market of Central and Eastern Europe, Middle East and Africa once again experienced strong growth, with revenue jumping by 22% and shipments by 19% in year-on-year comparisons," says Stefania Lorenz, research director for PCs and Systems at IDC. "The third quarter of this year exhibited strong uptake of EPIC-based systems in both regions, with revenue soaring by more than 130%. The oil & gas and telco sectors drove EPIC-based growth, although the overall economic stability in the regions was also important."
IDC Top Server Market Findings
- Revenue from volume servers grew by 12% annually in EMEA, and by 9% in Western Europe. High-end servers saw shipments increase on an annual basis, but factory revenue decreased, signaling lower average prices in the server segment priced above $ 500,000.
- Both Windows servers and Linux servers experienced annual growth in the mid-teens. Windows is now the dominant operating system for new server shipments by a considerable margin in every EMEA sub-region, and Linux servers are enjoying good revenue performance after increasing its presence in a wider variety of industries.
- Revenue growth for Unix servers was flat, but the operating system remained the second most popular. Windows server growth was mainly at the expense of z/OS and i5/OS servers, whose sales decreased by 34% and 25% respectively on an annual basis.
- Rack servers beat the pedestal form to the top spot with 47% of the total revenue in EMEA. Blades are progressively establishing themselves as a mainstream form factor and made up 8% of the total, with annual sales growth of 48% and 35% in EMEA and Western Europe respectively.
3Q07 Vendor Highlights
- HP significantly increased its market share. The vendor maintained its traditional stronghold in the x86 space, but it was a strong performance by its high-end servers, particularly the Integrity line, up by 71% annually, which tipped the balance in its favor.
- IBM lost market share in the quarter, which historically doesn't favor sales of System z and System p servers. The only family which saw growth was System x.
- Sun Microsystems held on to its market share thanks to good results for the high-end SPARC line.
- Dell's increased solutions marketing, focused segment approach, and pricing structure produced significant growth.
- Fujitsu Siemens Computers generated good growth throughout its portfolio and delivered 13% revenue growth, which translated into a small year-on-year share increase.
IDC's Server Taxonomy
IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers (servers priced less than $25,000), midrange enterprise servers ($25,000 to $499,999), and high-end enterprise servers ($500,000 or more). The revenue data presented in this release is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market-share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments. IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture.
