Server Revenue Declines Again in Q2

Second quarter sales for factory servers dropped 4.8 percent over Q2 2011 to $12.6 billion. 

According to IDC, this was the third consecutive annual decline since Q2 2010. Shipments were also down for the first time since Q3 2009, and dropped 3.6 percent to just 2.0 million units.

Mid-range and high-end servers were hit the hardest with a revenue decline of 11.2 percent and 7.6 percent, respectively. Volume server sales were down 2.5 percent. Non-x86 servers were down 19.4 percent and landed at $3.9 billion.

"It is also clear that economic uncertainty is weighing on the market and the sales cycle is lengthening," said Matt Eastwood, group vice president and general manager, Enterprise Platforms at IDC. "Regionally, server demand in Western Europe and Japan was particularly soft while server revenue in the U.S. and Asia/Pacific managed to grow modestly. It is important to note that IDC believes that server demand will begin to improve in the second half of 2012 following a number of critical product refreshes which continue to be announced."

HP held on to the top spot in the server market with a 5.0 percent revenue decline to $3.73 billion, followed by IBM, which had sales of $3.68 billion, down 8.2 percent from last year. Dell was the only major server vendor with revenue gains  (+5.9 percent to $2.02 billion), while Oracle declined by 20.1 percent to $752 million and Fujitsu dropped by 42.1 percent to $489 million.

Wolfgang Gruener is a contributor to Tom's IT Pro. He is currently principal analyst at Ndicio Research, a market analysis firm that focuses on cloud computing and disruptive technologies, and maintains the conceivablytech.com blog. An 18-year veteran in IT journalism and market research, he previously published TG Daily and was managing editor of Tom's Hardware news, which he grew from a link collection in the early 2000s into one of the most comprehensive and trusted technology news sources.

See here for all of Wolfgang's Tom's IT Pro articles.