Europe suffers server sales slowdown

Following 10 consecutive quarters of positive annual growth, the EMEA server market ended 2005 with a revenue slowdown, IDC research has revealed.

Factory revenue generated by server sales in EMEA declined by 4.4 per cent in the fourth quarter of 2005 over the same period in 2004, according to the analyst firm's lastest EMEA Quarterly Server Tracker findings.

However, unit shipments in the region continued to show positive year-on-year growth at 11.6 per cent.

The total EMEA server market in the fourth quarter of 2005 recorded factory revenue of $4.9bn on an all-time high of 676,000 server system units shipped.

"Corporate refreshes and renewed IT investment over recent years fuelled stellar market growth in the x86 server segment, which more than compensated for the tepid revenue performances seen in the Risc segment," said Nathaniel Martinez, programme manager at IDC's EMEA Server Solutions team.

"However, declining average system prices and squeezed margins in the volume server space combined with a receding midrange and high-end server market implied growth could no longer be sustained in the EMEA server market during the fourth quarter."

Server consolidation, infrastructure rationalisation and IT simplification continue to be top priorities for most companies, added Daniel Fleischer, senior research analyst at IDC's European Enterprise Server Solutions team.

IDC's sub-regional analysis of the EMEA market shows major variations in performance between countries.

Central and Eastern Europe continues to perform along a strong annual growth curve, recording 14.1 per cent year-on-year factory revenue growth, while Middle East and Africa, together with Western Europe, saw server factory revenue decline by 6.7 per cent and 6.1 per cent respectively.

"In Central Eastern Europe and Middle East and Africa [CEMA], server shipments surged by 28.1 per cent to nearly 170,000 units," said Stefania Lorenz, programme manager at IDC CEMA systems.

"Continuing price declines in volume servers meant that revenue grew by a less spectacular annual growth rate of 4.4 per cent to $864m. Expanding economies in the region are driving infrastructure upgrades and IT investments in the public and private sectors."

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