Slowdown continues in the server market

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

deterioration.

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

2010.

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

an

18.3 percent YoY decline in units.