IBM, HP Server Sales Hit By Recession

IBM, Hewlett-Packard, Dell and Sun Microsystems all watched their server systems revenue drop in the fourth quarter of 2008, as the US slipped further into a recession and the global economy slowed down.

Worldwide server revenue fell 14 percent from the fourth quarter of 2007 to the fourth quarter of 2008, with revenues for the fourth quarter at $13.5 (£9.27) billion, according to an IDC report.

For 2008, worldwide server revenue fell 3 percent year-over-year for a total of $53.3 (£36.6) billion. For the year, server system shipments increased only 2 percent for a total of 8.1 million units. Those numbers reflected the worse returns since the first quarter of 2002, just after the dot-com bubble burst.

“All major regions and top server vendors showed negative growth for the quarter,” Daniel Harrington, an IDC analyst, wrote in an email. “At the moment there are no signs of recovery for this market, but I think it will remain to be seen where the ‘bottom’ is. I think we can at least be sure that a meaningful turnaround is not expected to occur within the first half of 2009.”

For the fourth quarter, IBM remained the top server revenue leader but the company did see its numbers fall 15 percent from the fourth quarter of 2007. For the quarter, IBM pulled in revenue of $4.9 (£3.36) billion and the company saw demand for its Power-based systems increase but its System x (x86-based) line lost ground.

HP’s quarterly server revenue fell 10 percent for a total of $3.9 (£2.7) billion, which put the company in second place behind IBM. Dell also watched its server revenue fall 10 percent for a total of $1.4 (£0.96) billion. Sun’s revenue fell 14 percent for a total of $1.3 (£0.9) billion and Fujitsu/Fujitsu Siemens’ revenue fell 15 percent for a total of $567 (£389) billion.

In 2008, IBM remained the worldwide revenue leader with revenues totaling $17 (£11.7) billion. However, Big Blue’s revenue totals were 2 percent less than in 2007. HP’s annual server revenue slipped about 2 percent for a total of $15.8 (£10.8) billion.

Dell watched its 2008 server revenue drop 1 percent for a total of $6.2 (£4.26) billion. Sun’s revenues fell about 8 percent for a total of $5.4 (£3.7) billion and Fujitsu’s revenue fell 4 percent to $2.6 (£1.78) billion, according to IDC.

The IDC report also found that revenue from Unix, Microsoft Windows and Linux servers all dropped during the quarter. The decline in Window- and Linux-based servers also reflected the drop in demand for volume, x86 systems.

“Unix-based systems took less of a hit then Windows based systems, however the entire non-x86 and x86 segments were both down double digits in revenue,” Harrington wrote.

The one area that did show some positive signs was the blade market. Overall, blade server revenue increased 16 percent in the fourth quarter of 2008, while shipments increased 12 percent. HP dominated the market with a 54.8 percent revenue share. IBM followed with a 21.7 percent revenue share.

For 2008, blade server revenue increased 33 percent for a total of $5.4 (£3.7) billion.