BIG DATA

According to IDC's Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market declined 24.5% year over year to $9.9 billion in the first quarter of 2009 (1Q09). This is the third consecutive quarter of year-over-year revenue decline and the lowest quarterly server revenue since IDC began tracking the server market on a quarterly basis 12 years ago. Server unit shipments declined 26.5% year over year in 1Q09, accelerating from the 12% decline experienced in 4Q08 and representing the lowest quarterly server shipment total in five years and the largest ever year-over-year quarterly server unit decline.

Volume systems experienced the sharpest decline, with year-over-year revenue slipping 30.5%. Midrange enterprise demand weakened, with a year-over-year decline of 13.6%, and the slowdown extended to the high-end enterprise segment, as revenue declined 19.5% when compared to 1Q08. This is the second consecutive quarter and only the second time since 2002 that all three server segments have experienced a year-over-year revenue decline in the same quarter.

"Market conditions worsened in all geographic regions during the first quarter as customers of all types pulled back on both new strategic IT projects and ongoing infrastructure refresh initiatives," said Matt Eastwood, group vice president of Enterprise Platforms at IDC. "Most enterprise organizations are deferring new IT procurements and instead focusing on extending server lifecycles and improving existing asset utilization. IDC believes that while these strategies are effective in the near term, server demand will begin to improve in the second half of the year as customers begin to rebuild their IT capabilities in advance of a meaningful economic recovery in 2010."

Overall Server Market Standings, by Vendor

HP and IBM jointly held the number 1 position* in the worldwide server market in the first quarter, each with 29.3% share and IBM gaining 1.7 points of share and HP losing 0.7 points of share year over year. For IBM, this growth was driven by a solid performance in its System z and System p server businesses. Sun and Dell finished the quarter in a statistical tie* for the number 3 market position with Dell's server revenue declining 31.2% year over year and capturing 11.0% share in 1Q09. Sun's server revenue declined 25.5% year over year, ending with 10.3% revenue share. Fujitsu/Fujitsu-Siemens maintained its fifth-place standing in terms of factory revenue, with 6.7% market share in the quarter.

Top Server Market Findings

• The market for non-x86 servers, including servers based on RISC, EPIC, and CISC processors, declined 19.4% year over year to $4.8 billion in 1Q09. This is the fifth consecutive quarter that non-x86 servers have out performed x86 servers in the market. IBM maintained its leadership position, posting 42.8% share in this segment, followed by Hewlett Packard (21.8%) and Sun Microsystems (18.2%), respectively, based on factory revenue.

• Unix servers experienced 17.5% revenue decline year over year when compared with 1Q08. With particular resilience in the midrange enterprise segment of the market, worldwide Unix revenues were $3.3 billion for the quarter, representing 33.1% of quarterly server spending. IBM assumed the 1Q09 leadership position, posting 31.0% share in this segment, followed by Sun Microsystems (27.7%) and Hewlett Packard (27.7%), respectively, based on factory revenue.*

• IBM's System z servers running the z/OS operating system outperformed the worldwide server market for the fifth consecutive quarter, with a 18.9% year-over-year decline to $889 million. z/OS servers accounted for 9.0% of all server revenue in 1Q09, the highest first quarter revenue share for IBM's System z in five years.

• Microsoft Windows server revenue was $3.7 billion in 1Q09 showing a 28.9% year-over-year decline and comprising 37.3% of all server revenue in the quarter.

• Linux server revenue comprised 13.8% of server revenue in 1Q09, declining 24.8% year-over-year to $1.4 billion, its lowest revenue level in five years.

x86 Industry Standard Server Market Dynamics

The x86 server market decelerated sharply in 1Q09, declining 28.8% in the quarter to $5.1 billion worldwide as unit shipments declined 26.3% to 1.4 million servers. This is the lowest x86 server revenue since 3Q03, with the top 5 server vendors all experiencing x86 server revenue declines of 20% or more in the quarter. HP led the market with 36.5% revenue share and Dell retained second place, securing 21.4% revenue share.

"x86-based volume servers, historically an area of growth for the industry, posted another quarter of significant weakness during the first quarter of 2009," said Dan Harrington, research analyst in IDC's enterprise server group. "However, while it may be easier for IT departments to suspend purchases of commodity boxes as opposed to more mission critical RISC- or CISC-based servers, IDC expects x86 systems to rebound faster than the overall market in the coming quarters."

Bladed Server Market Results

The blade server market segment decelerated sharply in 1Q09, experiencing negative quarterly growth for the first time, with factory revenue declining 14.4% year over year on a 18.1% year-over-year shipment decline. Overall, bladed servers, including x86, EPIC (Itanium-based) and RISC blades, accounted for $1.1 billion in the first quarter, representing 11.0% of quarterly server revenue. HP maintained the number 1 spot in the blade market with 52.2% market share in 1Q09.

"Even though the blade market experienced negative growth, the segment still increased its share of revenue of the overall server market," said Jed Scaramella, senior research analyst in IDC's Datacenter and Enterprise Server group. "Customers are seeking IT solutions that reduce expenses and improve efficiencies. The integrated nature of the blade platforms is adept to deliver a dynamic IT infrastructure."

Unix Server Spend Increasing, As Percent of Total IT Spend

Although year-over-year Unix server revenue declined in the quarter, Unix servers represented a greater percent of total IT spend in 1Q09 (33.1% of worldwide server spend) than in 1Q08 (30.2% of total server spend). "IDC believes that lengthening server lifecycles in the datacenter, especially for scalable midrange and high-end servers, affected Unix server sales, in terms of declining revenue and unit shipments in the first quarter," said Jean S. Bozman, research vice president, Enterprise Platforms group. "However, their strong contribution as a percent of first quarter worldwide server spend reflects the presence of midrange and high-end systems carrying higher average sales prices (ASVs), and the bifurcation of the market into low-cost and high-end systems, based on specific workloads, such as large corporate databases, transaction processing and business intelligence (BI)."

Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, First Quarter of 2009

(Revenues are in Millions)

Vendor	1Q09 Revenue	1Q09 Market Share	1Q08 Revenue	1Q08 Market Share	1Q09/1Q08 Revenue Growth
1. Hewlett-Packard	$2,913	29.3%	$3,946	30.0%	-26.2%
1. IBM	$2,904	29.3%	$3,624	27.6%	-19.9%
3. Dell	$1,093	11.0%	$1,590	12.1%	-31.2%
3. Sun Microsystems	$1,018	10.3%	$1,367	10.4%	-25.5%
5. Fujitsu/Fujitsu Siemens	$667	6.7%	$821	6.2%	-18.8%
Others	$1,329	13.4%	$1,799	13.7%	-26.1%
All Vendors	$9,924	100%	$13,147	100%	-24.5%

IDC's Worldwide Quarterly Server Tracker, May 2009

IDC's Server Taxonomy

IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers (servers priced less than $25,000), midrange enterprise servers ($25,000 to $499,999), and high-end enterprise servers ($500,000 or more). The revenue data presented in this release is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market-share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments.

* Note: IDC declares a statistical tie in the worldwide server market when there is less than one percent difference in the factory revenues of two or more vendors.

IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global 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, operating system, price band, CPU type, and architecture. For more information, please contact Hoang Nguyen at 508-935-4718 or hnguyen@idc.com.