A glut of capacity in the server market has been blamed for dismal international server revenues for the first quarter. Locally, the market seems to have bucked the trend, with HP, Compaq and Sun all claiming increased revenue in SA for the first quarter.
Gartner Dataquest puts the international revenue drop at over 15%, while the International Data Corporation (IDC) says server factory revenues plummeted by 20% for the first quarter this year. The Unix market was particularly hard-hit, contracting more than the industry average, although the Linux server market increased by 55%.
Tony Bogatie, Compaq South Africa`s Industry Standard Server Group (ISSG) business unit manager, says Compaq grew locally quarter-to-quarter, but notes that the market isn`t "booming".
"I wouldn`t say it`s flat, it`s not booming either, but we are seeing positive growth quarter-on-quarter," he says. Bogatie notes that server consolidation is a major trend in the market at the moment. "Because they`re consolidating, it doesn`t mean that the customers have stopped buying servers - they`re buying fewer but larger servers."
Wim Heuninck, HP SA`s marketing director, confirms that HP has seen a growth in the local server market. "Server demand is growing quite steadily in SA," confirms Heuninck, and notes that with Compaq, the new HP represents a little under 50% of local market share.
Sun Microsystems says it did not suffer locally, claiming an increase in revenue for the quarter. IBM would not comment on local revenue figures, saying policy dictates that the company does not publicly divide figures by region.
International analysts are still upbeat about the coming year. "While the market continued to decline, results certainly indicate that the environment is improving," says Vernon Turner, IDC`s group VP of global enterprise server solutions. "Relatively flat sequential growth for Sun Microsystems, Dell and Compaq`s ISSG all help point to firming conditions for the volume server market and a return to a more predictable demand."
Despite the drop in revenue, the main players did not shift much on the international market share scoreboard. While Compaq lost half a point in market share, HP gained half a point, leaving the new company in a stable position. IBM`s international encroachment into Sun`s market space seems to be slacking off as the need to increase revenue has ended the price war. Sun lost some footing on the Unix space, but gained significantly in the emerging Linux market.
Overall standing puts IBM in first place, Compaq second, Sun and HP neck-and-neck for third and fourth, with Sun beating HP by 0.2% (according to IDC`s figures), and Dell trailing with 8% market share.
Local research house BMI-TechKnowledge expects to finalise figures for the local market`s first quarter performance by Monday, which may add clarity as to why the local market bucked the trend.
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