Server sales shrink in 2009, but market will stabilise, says IDC

According to IDC’s Worldwide Quarterly Server Forecast, customer spending in the worldwide server market is expected to decline 29.6 percent to $10.6bn in the second quarter of 2009. This represents the fourth consecutive quarter of year-over-year spending decline for servers and a further acceleration in the pace of worldwide market deterioration.
IDC forecasts that the worldwide server market will see eight quarters of year-over-year revenue declines and expects annualized 4-quarter rolling server spending will drop by 30.3 percent or $19.1bn during the 2Q08 to 2Q10 period. Additionally, IDC believes 2Q09 represents the largest year-over-year server sending decline the market will experience in this negative business cycle as the rate of market decline improves significantly in the second half of 2009 and early 2010.
“IDC has lowered its 2Q09 forecast by 8.5 percent or nearly $1bn from our previous forecast as the depth of the worldwide recession increased in the first half of 2009,” explains Matt Eastwood, group vice president of Enterprise Platforms at IDC.
“Although we are now forecasting a 22.1 percent year-over-year decline in server spending for 2009, the worst of the market contraction is behind us. In fact, by the end of the third quarter this year, nearly 90 percent of the cumulative market contraction will have been realized as the market begins exhibiting significant signs of stabilisation. It’s important to note that IDC believes many IT users will begin making strategic compute platform decisions during the remainder of 2009 in advance of improving business conditions and server demand in 2010.”