Slowdown continues in the server market

DQW Bureau
30 Jun 2009

Customer spending in the worldwide server market is expected to decline 29.6
percent to $10.6 billion in the second quarter of 2009 (Q2 2009), according to
IDC's Worldwide Quarterly Server Forecast.

This represents the fourth consecutive quarter of YoY spending decline for
servers and a further acceleration in the pace of worldwide market

In total, IDC forecasts that the market will see eight quarters of YoY
revenue declines and expects annualized four-quarter rolling server spending
will drop by 30.3 percent or $19.1 billion during the Q2 2008 to Q2 2010 period.

Additionally, IDC believes Q2 2009 represents the largest YoY server sending
decline the market will experience in this negative business cycle as the rate
of market decline improves significantly in the second half of 2009 and early

Matt Eastwood, Group VP-Enterprise Platforms, IDC, said, “Although we are now
forecasting a 22.1 percent YoY decline in server spending for 2009, the worst of
the market contraction is behind us. In fact, by the end of the third quarter
this year, nearly 90 percent of the cumulative market contraction will have been
realized as the market begins exhibiting significant signs of stabilization.
It's important to note that IDC believes many IT users will begin making
strategic compute platform decisions during the remainder of 2009 in advance of
impro­ving business condi­tions and server demand in 2010.”

In CY 2009, spending on volume systems will decline 21.5 percent YoY on an
18.5 percent YoY decline in unit shipments as market conditions for the segment
begin to improve modestly in the second half of 2009. Midrange enterprise demand
is expected to weaken in Q2 2009 with 2009 spending down 9.6 percent YoY.
High-end enterprise spending is forecasted to decline 35.2 percent YoY in 2009
as capital budgets in large enterprises remain constrained throughout the year.
In total, server spending is forecasted to be down 22.1 percent YoY in 2009 on
18.3 percent YoY decline in units.

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