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Poor Economy Continues To Hammer Server Market

The worldwide server market continued to free-fall in the second quarter, but at least one analyst firm reported signs that the market, which has been hit hard by the economic recession, is stabilizing.

Worldwide server revenue fell 30.1% in the quarter from the same period last year to $9.8 billion, the lowest level since IDC started tracking the market on a quarterly basis in 1996. The drop was the fourth consecutive quarterly decline.

Competing research firm Gartner also reported a big drop in server revenue, 29.4% year-to-year to $9.7 billion. Shipments fell 28% to 1.7 million units.

But IDC saw signs that the market was stabilizing. With manufacturers shipping fewer servers over the last four quarters than at any time since 2005, customers were holding on to a lot of aging systems that would have to be replaced in the near future.

"In the weeks and months ahead, IDC believes that IT customers around the globe will begin to focus on the future once again, making strategic compute platform decisions for the next business cycle, and driving more predictable server demand as market conditions stabilize in the second half of 2009," Matt Eastwood, group VP of Enterprise Platforms at IDC, said in a statement released late Tuesday.

In the meantime, every segment of the server market -- x86, Unix and Linux -- saw declines in sales in the second quarter. All the top five vendors experienced year-to-year double-digit declines in revenue, according to both analyst firms. Gartner, which released its numbers Wednesday, reported that shipments also fell by double digits for each of the vendors.

In terms of revenue, IBM continued to lead the pack, followed by Hewlett-Packard, Dell, Sun Microsystems and Fujitsu/Fujitsu Siemens, respectively. In terms of unit shipments, HP led, followed by Dell, IBM, Sun and Fujitsu/Fujitsu Siemens, respectively, Gartner said.

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