Worldwide Server Market Flat in Q2

According to research from Gartner Dataquest, the U.S. server market produced two consecutive quarters of positive growth on the year. But the rest of the world does not replicate this trend—global server sales remain flat halfway through the year.

by ISP-Planet Staff [August 6, 2002]

Gartner Dataquest says the difficult economic times are still having an effect on the server industry. In its analysis of server shipments for the second quarter of the year, Gartner Dataquest reports that worldwide server shipments totaled 1.08 million units, reflecting an increase of 0.5 percent over the second quarter of 2001.

Shahin Naftchi, Gartner Dataquest' senior analyst covering servers, said the weak business environment worldwide continues to have a great impact on the server industry.

"Because of customers' uncertainty of their own business, purchasing high-end servers, changing to a new platform and signing big contracts are still deferred, which elongate the sales cycle," Naftchi said. "For the time being, customers are focusing on deployments that can yield quick return on investments by purchasing less expensive systems or upgrading their established systems if necessary."

The combination of Hewlett-Packard and Compaq moved it into first place in the worldwide rankings, with 30.5 percent of the market. Dell fell to the No. 2 spot, but increased its market share to 18 percent, up from16 percent one year ago (Table 1).

The U.S. server market showed a nearly 10 percent increase in the second quarter of 2002, with shipments of 482,647 units, up from 439,163 in the second quarter of 2001 (Table 2). The merger of HP and Compaq had a significant effect on the U.S. vendor rankings. As a result, HP assumed the No. 1 spot with 26.8 percent of the market. This pushed Dell into second place with 24 percent market share, followed by IBM, Sun and Gateway.

Jeffrey Hewitt, Gartner Dataquest principal analyst, said it's too soon to tell whether a merged HP-Compaq will maintain its top ranking.

"Since the merger of HP and Compaq is still in its early stage, HP is still faced with the challenges of transitioning its product lines and integrating the two corporate cultures, Hewitt said. "On the other hand, the post-merger challenges facing HP may benefit customers if the company decides to offer better prices and attractive contracts to protect its installed customer base."

This is the second quarter of positive growth for the U.S., prompting speculation that the region may be signaling the end of the market downturn. Even though there are signs of unit stabilization in the U.S., the market has yet to show signs of consistent revenue growth. Gartner Dataquest analysts contend that without a stable revenue stream, it's unclear whether many companies would have enough confidence to invest heavily in new server equipment.

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