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HP, IBM Bruised By Sluggish Server Market

Worldwide server revenue drops 7.7% in Q1, says IDC. Dell, on the strength of its data center products, was the market's best performer.

The worldwide server market suffered a 7.7% drop in factory revenue in the first quarter of this year, according to a report published Wednesday by research firm IDC. Revenue dropped for the fifth time in the last six quarters, pulled down by not only economic forces but also a shift toward more efficient and agile data center technologies.

The report follows similar conclusions released earlier this week by Gartner.

HP claimed the leading position, snaring 26.9% of the market's total factory revenue, but the news was still mostly bad for the company. Its 14.8% downtick in revenue was almost twice as severe as the industry's already-lousy overall average, and its revenue share was down from Q1 of last year, when it held 29.2% of the market. IDC attributed the losses to diminished interest in HP's x86-based ProLiant servers, which have ceded territory to more aggressively priced competitors.

The research firm also singled out weak demand for HP's Itanium-based, mission-critical servers. One of the only products that uses Intel's Itanium chips, the servers' future has been in doubt in recent years, a period during which they've lost ground to more-prominent x86 systems. Itanium servers also played a central role in a contentious HP-Oracle lawsuit. Despite this history, HP has continued to express confidence in the platform's longevity.

IBM was second, with 25.5% of the market, down from 27.2% last year. IDC blamed the company's 13.4% revenue drop on decreased demand for not only Power Systems servers, which compete with HP's Itanium systems, but also the x86-based System x line.

... Read full story on InformationWeek

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