Server revenues continue to plummet

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Server revenues are continuing to feel the brunt of the recession, dropping to their lowest quarterly level since records began.

A report from analyst firm IDC showed revenue in the second quarter falling to $2.9 billion (£1.78 billion), a 35.8 per cent annual decrease, with less than half a million units shipped.

This was the fourth quarter in a row that revenues fell.

Beatriz Valle, analyst for European systems and infrastructures solutions at IDC, said in a statement: “Conditions remain tough because customers have been limiting IT spending to the bare essentials to keep their IT infrastructure running, and this has negatively impacted hardware investment.”

Gartner also released a report showing slightly kinder figures but still a hefty fall.

The analyst said revenues have dropped by 29.4 per cent with revenues from the market-driving x86-based servers even falling by more than a quarter (25.7 per cent).

Jeffrey Hewitt, research vice president at Gartner, said in a statement: “The server market remains constrained on a worldwide level.”

However, all is not lost as both sets of analysts agreed that there is light at the end of the tunnel.

Valle said there were signs of stabilisation in the market and Errol Rasit, senior research analyst at Gartner, added in a statement: “As economic conditions start to stabilise, the outlook for the third quarter of 2009 is for slightly improved results compared with those seen in the first half of 2009.”

Both firms also agreed that caution was needed and it will take more than one quarter for the market to return to the strength it demonstrated two years ago.

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