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Where next for server sales in EMEA? Downwards, says Gartner

This article was originally published on Technology.Info.
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For server manufacturers, Europe, the Middle East and Africa (EMEA) is now one of the hardest regions in which to do business, and for most of them, 2013 will be a “year to forget”, according to recent figures from IT market research company, Gartner.

It found that, in the third quarter of 2013, both sales and unit shipments of servers declined. Shipments were down 7.2 percent from the corresponding quarter of 2012, to almost 548,000 units. Revenues, meanwhile, were down 4.3 percent at $2.8 billion.

The blame for the situation lies not with the sovereign debt crisis still playing out in many countries in the region, but squarely with two major technology trends: virtualisation and cloud computing.

“The market is resetting itself to a new level, with architectural shifts making life very challenging for vendors that have relied on high-end platforms in the past,” says Gartner analyst Adrian O’Connell. “The ongoing economic weakness plays its part here, but there is also a broader shift taking place that brings a new set of competitive challenges.” The fourth quarter, he added, is also expected to be weak.

Nor is this any kind of temporary blip, but a prolonged “downward spiral”, according to O’Connell. “Revenue has now declined for nine consecutive quarters and shipments have declined for eight.”

Emphasising his point, he adds: “Server revenue across EMEA is at its lowest level for over 15 years, which underlines the increasing contraction of the server market.”

Gartner’s worldwide server shipments market report finds that both Western Europe and Eastern Europe saw sales drop by 4.8 percent and 13 percent, respectively.

In terms of vendor performance, three vendors in the top five ranking showed an EMEA sales dip in the third quarter of 2013. These were second-place IBM (19.2 percent dip); third-place Dell (8.5 percent); and fifth-place Oracle (15.5 percent). First place went to HP, which saw a revenue increase of 1.1 percent. Fujitsu came in at fourth place, meanwhile, with a 1.5 percent increase in revenues.

On a worldwide basis, server shipments grew 1.9 percent year-on-year, while revenue declined 2.1 percent. Only three regions that exhibited positive sales growth during the third quarter: Canada (6.5 percent); the Middle East and Africa (12.1 percent); and the US (0.9 percent).