Price hikes caused by the robust dollar could result in European server customers deferring purchases for at least the first half of this year, potentially translating into another period of stagnating revenues.
With Microsoft ending support for Windows Server 2003 and Intel refreshing Xeon – which made vendors respond with shiny new systems – the sector is banking on a relative feast of sales for 2015.
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But they might be disappointed if the mystic mages at Gartner are to be believed. They are predicting market revenues in Europe will again climb by low-single digits at best or remain flat.
“The US currency is continuing to strengthen so limitation management will only increase in Q1 and Q2,” said Errol Rasit, research director, “pricing will increasingly reflect the currency exchange rate situation”.
“Maybe organisations will put off purchases until such a time that prices come down again. These are the sorts of strategies that we see being put in place,” he said.
The “danger” some for server vendors is that a capital deferral may see the budget used for other projects.
So far this year a number of system vendors including HP and Dell marked up the price on their hardware by an average of six per cent – but if the situation continues, further hikes can be expected.
“Chinese vendors linked to the dollar may choose to absorb that currency pressure to be more price competitive, but US vendors are already under pressure from falling margins,” he added.
There are investors to sate on a quarterly basis and they want the reduced dollar haul made up in other ways.
This may be music to the ears of Lenovo, which in the UK at least, was left counting the cost of a System x sales slide in Q4, when IBM finally handed over the unit to it.
Rassit told us organisations got used to sweating their assets for longer during the recession, “perhaps going through the three to five year warranties”. Virtualisation played a crucial role here, he added.
With around 400,000 physical servers running WS2003 in Blighty late last year, according to HP estimates, channel types could be forgiven for forecasting good times ahead – particularly after the XP factor last year that sparked a revival in PC sales.
The cost of buying custom support for Microsoft isn’t to be sniffed at – $600 per server for the first year – so there would seem some impetus to swap, on top of the potential security implications.
But Gartner warned servers will not be replaced on a like-for-like basis because virtualisation has reduced the importance of hardware. ®
Wololo – noun, the sound made by priests in the 1997 PC gaming classic Age of Empires I. See also this brief article about them.