IDC revises server-sale forecasts down for EMEA

If the server market in 2000 was a trip to the Elysian Fields, 2008 was like a break at Butlins, and 2009 will be remembered as a trip to grandma's for a painful weekend. That weekend will be longer and more difficult in EMEA, apparently.

As El Reg reported last week, IDC put out a forecast of future server sales - or the lack thereof - running out to 2013, which basically says that 2009's global server sales will be awful, declining 22.1 per cent to $44.5bn.

Looking ahead, IDC's box counters are projecting that global server sales will be down four-tenths of a per cent in 2010 to $44.3bn, thanks to small declines in sales of midrange servers - which cost between $25,000 and $500,000 - and double-digit declines for enterprise servers, which cost more than $500,000. Volume servers - which cost under $25,000 - with only 4.3 per cent sales growth next year, are a relative bright spot in 2010, mostly thanks to virtualization-induced server consolidation on x64 boxen.

Between 2011 and 2013, growth for volume servers worldwide will hover between five and six per cent per year, the midrange will recover a bit, but only a tiny bit, and the enterprise market will be flat or down. Basically, 2009 is the new normal, with meager growth per year after 2011. And that is assuming that the global economy starts recovering.

If that wasn't depressing enough for the server makers and channel partners hoping for recovery starting late this year and something akin to normality - meaning about $10bn in server sales per year than it looks like they will get - IDC has now zeroed in on Europe the Middle East and Africa (EMEA) and revised its forecasts downwards. In some ways, EMEA is going to do better than the world at large and in others, IDC expects it to do worse.

"The server market slowdown is taking different shapes and timeframes depending on the country, with the UK already severely hit, and continental countries following on that path," explained Beatriz Valle, research analyst for IDC's European server unit.

Valle said the second half of 2009 would see more pronounced declines in revenues than in shipments, reflecting the lower average selling price of machines - despite all the talk to the contrary by server makers that virtualization is boosting application service providers and therefore doesn't have an adverse impact on sales.

She added that IDC said the declines will lessen over the next four quarters, but that the EMEA server market will not see actual growth until the third quarter of 2010. Revenues will bottom out in the first quarter of 2010 at $2.6bn for sales across EMEA.

This year, the EMEA region is going to be hit harder than other parts of the globe, with sales projected to drop by 33 per cent to $12.4bn. Enterprise servers are going to take it hard on the chin this year across Europe, with sales expected to be down a staggering 52.4 per cent to $2.05bn. Some of this decline is attributable to delays in the delivery of new high-end processors, such as Sun Microsystems' Rock family of UltraSparc-RK that is rumored to be getting killed off ahead of the Oracle acquisition, Intel's much-delayed Tukwila Itanium, and the eight-core Nehalem EX Xeon 7500s that won't be ramped until the first half of 2010.

This year, IDC calculates that the volume server biz will generate $6.83bn in sales, down 29.7 per cent - and that is with impressive x64 server lineups based on new chips from Intel and AMD and a new generation of hypervisors from VMware and XenServer to better exploit these chips for virtualization. Midrange box sales in EMEA this year are expected to be relatively rosy, with a decline of only 21.5 per cent to $3.49bn.

IDC is guessing that enterprise servers take a hit again in 2010, but more or less stabilize through 2013, wiggling a bit here and there. The midrange is expected to hold up in 2010, but takes its lumps in 2011 and 2012 with a recovery in 2013, a recovery that will see sales only reach $3.23bn.

The volume server space is expected to see a recovery in 2010 in the EMEA region, growing at 2.6 per cent to just over $7bn and showing low single-digit growth through 2013, when volume servers will account for $7.95bn in sales. Companies can only put off upgrading their x64 boxes for so long. ®