Server revenue tumbles as recession deepens

Blade servers have emerged as the one shining light in an otherwise bleak report from market research firm IDC, which said that IBM, HP, Dell and Sun Microsystems have all seen a plunge in yearly and quarterly server revenues.

Global server revenue fell 14 per cent in the fourth quarter of 2008 compared to the same period in 2007 to reach just US$13.5 billion.

Year-over-year, global server revenue fell three per cent in 2008 to US$53.3 billion, and server system shipments increased only two per cent to 8.1 million units, the worst figures since the dot-com bust of 2002.

IDC said that IBM retained its position as leader in server revenue, despite a 15 per cent slump compared to the fourth quarter of 2007. HP came a close second with server revenue of US$3.9 billion, a 10 per cent drop on the previous year's quarter. Dell recorded a 10 per cent fall in revenues to US$1.4 billion, while Sun revenue fell 14 per cent and Fujitsu Siemens revenue fell 15 per cent.

IDC also claimed that revenue from Unix, Windows and Linux servers all dropped during the last quarter of 2008, attributed to a fall in demand for x86 systems.

However, in what will be seen as some light at the end of the tunnel, IDC said that blade server revenue actually increased by 16 per cent in the fourth quarter of 2008, with shipments up 12 per cent. For the year, blade server revenue increased 33 per cent to US$5.4 billion in 2008.

Gartner also released a report today indicating that the financial crisis would result in almost record revenue declines in 2009 for the semiconductor industry.

The analyst firm expects global semiconductor revenues to sink to just US$194.5 billion this year, a 24.1 per cent decline over 2008. The figures are noticeably worse than a Gartner report released in mid-December, which predicted semiconductor revenues to drop by only 16 per cent.