EMEA Server Market Revenue Fell 3.8% in 3Q08, Impacted by Slower Sales in Western Europe, Says IDC

LONDON and PRAGUE – December 5, 2008- According to IDC's EMEA Quarterly Server Tracker, factory revenue in the EMEA server market dropped by 3.8% year on year to nearly $4 billion in the third quarter of 2008. This marked the largest quarterly revenue decline since 4Q05 as technology spending in large European economies slowed down. Server shipments were up 4.9% on the same period, exceeding 650,000 units.

Server sales in Western Europe recorded the strongest deceleration in EMEA, with revenue declining by 7.6% annually, to nearly $3 billion, and units were also down by 0.6%. "The data collected in IDC's Quarterly Server Tracker in 3Q08 reflects how the deteriorating economic conditions in Western Europe are having a direct impact on IT spending and changing the server market dynamics of the last couple of years," said Nathaniel Martinez, director of European Enterprise Servers at IDC. "The economic downturn is forcing European companies to slow their server spending and review their buying behavior. Purchases are now driven by critical needs and much higher justification for expenditure. Large organizations are launching internal asset inventory projects before committing to any purchases, while organizations in most sectors are focusing on projects that reduce costs rather than adding new capacity."

According to Stefania Lorenz, director of Hardware and Systems, for the CEMA region, "CEMA grew 9.7% thanks to the growth of Central and Eastern Europe, whose revenue share of the total EMEA market rose from 11.9% in 3Q07 to 14.6% in 3Q08. As a result, server revenue in Western Europe was only 75.1% of the total revenue in EMEA, three percentage points lower than in the same quarter of 2007. The reason behind the CEE growth is that this subregion is no longer demanding only industry standard servers, which grew by 15.9%, but also more expensive non-x86 servers, which grew 22% year on year."

IDC Server Market Findings

Non-x86 servers declined by 6.3% over the same quarter last year, with units declining by 16%. EPIC revenue experienced growth of 16.3% to over $400 million, while RISC suffered important annual losses of 15.5% over the same quarter last year.

Revenue from x86 servers declined slightly over the same quarter last year, by 1.7%, but units rose 6% to over 600,000 servers shipped in the EMEA region. Industry standard servers made 55.7% of total revenue and accounted for 96% of total units.

All main operating systems suffered revenue losses except for Windows, whose growth was quasi-flat, and IBM's z OS, which enjoyed a healthy annual increase of 11%, helped by the CEE subregion, where this operating system rose 47.8% annually. Windows saw its share of the total market grow by two percentage points. The drop in Linux revenue was very minor, but Unix decreased by 5.7%. At present, Linux revenue stands at 15.3% of the total in EMEA.

Bladed servers sales performed well above the market average, rising 37.5% annually, and approaching the half billion revenue mark. Sales of both pedestal and rack servers decreased annually in the mid-single digits. The market share for blades rose from 8.4% of total revenue in 3Q07 to 12% in 3Q08 in EMEA.

IDC Vendor Market Findings

HP was the leading vendor in EMEA, and displayed growth of 2.4%, thanks to strong sales of its industry standard Proliant line, which represented 67.3% of its total revenue and its server Integrity line.

IBM maintained the same revenue share it had in the same period of the previous year. Its revenue decreased slightly in the face of declining sales of its x86 line of servers. System z mainframes saw revenue grow by 11% annually in EMEA and were particularly successful with new corporate customers across the CEMA region.

Sun Microsystems lost server market share compared to the same quarter a year ago, despite strong performance from its SPARC Enterprise systems line.

Dell was the only vendor alongside HP to enjoy an annual revenue increase after its x86 PowerEdge servers maintained a fairly balanced performance across the volume and value areas. On the other hand, the vendor increased its shipments by only 4% year over year, slowing down compared to double digit growth in recent quarters.

Fujitsu Siemens lost around two percentage points in its overall EMEA share over the year ago period, but enjoyed a return to form after what has been a transition period for the company while negotiations continued for Fujitsu's purchase of Siemens's stake in the company.

Top 5 EMEA Server Vendors 3Q08 (Factory Revenue in Millions)

Vendor 3Q07 Revenue 3Q07 Market Share 3Q08 Revenue 3Q08 Market Share Growth 3Q08 over 3Q07 Hewlett-Packard $1,527.35 36.80% $1,563.31 39.20% 2.40% IBM $1,136.47 27.40% $1,093.32 27.40% -3.80% Sun Microsystems $462.40 11.10% $415.38 10.40% -10.20% Dell $373.80 9.00% $379.26 9.50% 1.50% Fujitsu Siemens $342.28 8.30% $274.16 6.90% -19.90% Others $306.30 7.40% $265.96 6.70% -13.20% Total Market $4,148.59 100.00% $3,991.39 100.00% -3.80%

Source: IDC's EMEA Quarterly Server Tracker

IDC's EMEA Quarterly Server Tracker is a quantitative tool for analyzing the server market on a quarterly basis. The tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, country, operating system, price band, CPU type, and architecture. For more information, please contact Nathaniel Martinez on +44 (0) 20 8987 7184 or email nmartinez@idc.com, or contact your local IDC office, or visit www.idc.com.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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