London, December 3, 2002 - Worldwide sales of servers dropped 5.6% in 3Q02 against levels in 3Q01. Of the various regions studied by IDC, Western Europe performed worst, delivering total sales of $2,939 million, which represents a decline of 12.4% on a year-on-year basis and a sequential decline of 7.0% against 2Q02.
"This definitely demonstrates that there continue to be challenges in the region," said Thomas Meyer, head of IDC's server research in Western Europe. "However, it is normal to see the third quarter come in below the second, as this is a time when many businesses in Europe enjoy lengthy vacations." In fact, the results would be even worse if looked at on a constant dollar basis, given the strong growth of the euro against the US dollar over the last year.
On a unit basis, the market slightly grew - the 260,064 unit shipments showing a 1.7% increase on the previous year, making the average value of all servers shipped in the quarter just $11,300.
Demand for Linux based servers showed a positive increase of 3.1% year-on-year (4.3% sequentially) - the only operating system type to show growth. Of the others, Windows-based servers (with a 3.8% decline against 3Q01) and Unix (with a decline of 11.4%) were the next best performing operating system types. On a unit basis, IA32 based CPU types represented 87.2% of shipments, although their lower average cost in comparison with RISC and CISC based servers meant that they represented only 39.6% of market spending.
The blade form-factor again showed growth this quarter of 26.6% with respect to units. This growth was driven by the current 1-way offerings, designed for front-tier Web-based applications. Growth can be expected to accelerate as new vendors enter the market and those currently involved launch 2-way blades capable of running enterprise applications.
On a country basis, we continue to see major variations, demonstrating the cultural variety of the region. The UK and France sustained much stronger business than Germany, as did Italy, in particular, which saw a 23.3% decline on a year-on-year basis. "Understanding the different shapes, issues, and demand at the country level can make a big difference to server vendor success," said Martin Hingley, VP of IDC's European Systems Group.
On the vendor front, there were a variety of movements, demonstrating the seasonality of their business (especially when the vendor is heavily involved in selling higher priced servers and using direct distribution) and the effectiveness of on-going reorganization within many. Figure 1 below shows the market shares for key server vendors in Western Europe for the quarter. Total Vendor Revenues were $2,682 Million
Following its merger with Compaq, HP managed to come out ahead of IBM for the second time in history. Both HP and IBM enjoy a strong lead over the third and fourth place players. Sun was the strongest performer among the top four vendors, showing only a 0.4% decline against the previous year. FSC is the fourth large server vendor in Western Europe, taking a 10.1% share in the quarter. Dell was the only server vendor to show growth among the major players, showing an increase of 1.6% in 3Q01.
IDC believes that there will continue to be a decline in 4Q02 against the previous year, although we expect there to be sequential growth against the low levels shown in 3Q02. Following the publication of our market sizing, we will be working to deliver our forecast in the next few weeks.
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Terry Cummings
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Daniel Fleischer
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