The server market in the Middle East and Africa (MEA) contracted 10% year-on-year in the second quarter of 2015.
This is according to the latest figures from International Data Corporation (IDC), showing a total of 65 000 units of x86 and non-x86 servers were sold in Q2.
IDC says the decline can primarily be attributed to the poor political and socio-economic conditions that have hampered a number of countries in the region. This was particularly notable in the x86 server market where a number of significant projects within the government sector were delayed.
In revenue terms, the market remained flat, as there was a slight increase in the number of higher-end servers sold during the quarter.
"Saudi Arabia and the UAE experienced very slow quarters, both in terms of x86 server units and revenue, primarily due to delayed budget rollouts, the traditional slowdown over Ramadan, and continuing uncertainty around falling oil prices," says Victoria Mendes, a research analyst for systems and infrastructure solutions at IDC Middle East, Africa and Turkey.
"Combined, these two countries suffered declines of 28% in volume and 21% in value year-on-year in Q2 2015. But despite the slowdown, the UAE did see a few deals take place in the government and financial sectors, while Saudi Arabia saw a big deal in the oil and gas industry."
The South African server market expanded 24% year-on-year in revenue terms, as a result of some non-x86 deals in the banking and telecommunications sectors.
"The declining average price of x86 servers has resulted in an increase in the number of units being purchased," according to IDC.
HP retained top spot in the MEA server market with 42% share, followed by Dell with 27%. Lenovo saw its share shrink, but managed to hold onto third place. Cisco's shipments slowed a little year-on-year but its revenue was up 31% over the same period thanks to the strong performance of its blade form factor.
IDC predicts the second half of 2015 will see the MEA server market experience a 4% increase in volume but a 6% decline in value year-on-year. The growth in units will be spurred by a number of significant deals that are expected to take place in key countries, including Saudi Arabia, South Africa, and Nigeria. These deals will primarily be within the healthcare, government, financial services, and telecommunications sectors.
The decline in the market's revenue will be driven by the fact that vendors such as Huawei and Lenovo are offering servers that are almost 40% cheaper than the prices offered by the market's A-ranking vendors.
"Longer term, the outlook for the MEA server market makes for grim viewing, with single-digit growth rates forecast for the duration of IDC's five-year forecast period," says Mendes.
"This represents a significant slowdown from the bumper double-digit growth rates seen in the past. The first half of 2015 has ascertained that the prevailing macro-economic forces are having a negative impact on enterprise IT spending, and the server market is unlikely to escape the fallout."
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