Date:05/09/11

EMEA Server Market Remains Buoyant in 2Q11, Up 12.5%, the Fastest Rate of Annual Growth in Seven Years, Says IDC

According to the latest EMEA Quarterly Server Tracker from International Data Corporation (IDC), the EMEA server market in 2Q11 recorded the second consecutive quarter of double-digit annual growth, with overall sales of servers reaching $3.4 billion, after growing 12.5% year on year.

If the results in the previous quarter signalled the first double-digit revenue increase in four years, or since 1Q07, this quarter's figures display an even greater landmark, with the fastest pace of growth since 2Q04, seven years ago. On the volume side, shipments surpassed 543,000, an annual increase of 2.7%.

However, IDC believes that despite the encouraging results, when looking at server revenue totals in absolute terms, the figures are well below the peak of the EMEA server market in 4Q07, when revenue reached $5.4 billion.

Mainstream adoption of virtualization, multicore processing, and cloud computing, combined with hardware sales cycles weakening after the current spike in demand, especially in Western Europe, will compound the deteriorating macroeconomic conditions, leading to weaker server demand in EMEA in 2H11.

By technology, the market continues to be mainly driven by sales of x86 servers, with revenue reaching $2.3 billion, an increase of 14.6% year on year. On a quarterly basis, there was a slight decline of 2.5%.

The release of the Xeon 7500 and Opteron 6000 processor series in 2010, and the release of the E7 Xeon platform in 2011, have accelerated the overall trend. Shipments of industry standard servers reached nearly 533,000 units, an increase of 3.2% on the same quarter last year.

Non-x86 systems performed well, with revenue totalling $1.1 billion, an increase of 8.5% year on year and 0.4% quarter on quarter. On the volume side, units were down 17% annually, with less than 11,000 units shipped.

"Continued stabilization of Unix server sales, refresh activity of x86 installed bases relayed by some very large HPC deals in some countries in the manufacturing and banking sectors, combined with strong CISC server sales momentum, contributed to double-digit year-on-year EMEA server revenue growth," said Nathaniel Martinez, research director in the Enterprise Server Group for IDC EMEA.

"The spill-over from post-downturn pent-up demand resulted in strong second-quarter results, particularly regarding mainframe performance in every main economy in Western Europe, especially Germany, up 61.7% year on year, and with the sole exception of France.

Central and Eastern Europe also registered healthy CISC growth, with Russia up 162.6% year on year. In the RISC Unix segment, higher ASVs indicate growth in the high end, less vulnerable to migration to x86.

Overall, the enterprise market enjoyed a boost thanks to CISC demand from finance and government, in sites with specific requirements for security and availability in mission-critical databases.

We are also finding net new demand boosting RISC sales in greenfield sites, in the less mature markets across EMEA," said Beatriz Valle, senior research analyst in the Enterprise Server Group for IDC EMEA.

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