5.5 million installed servers represent a crucial opportunity for vendors to improve sales in a saturated European server market, says IDC

LONDON – JANUARY 25, 2006 – A new IDC study has highlighted the fact that examining the server installed base and asset value is an increasingly important focus for effectively planning future sales into the mature Western European server market. While there is still some scope for placing new types of machines into new locations, the vast majority of servers purchased in the Western European region are replacing existing systems.

"The server replacement rate will rise slowly from 2005 to 2008, and will shift to a dramatic rise (2.5 million) by 2009," said Nathaniel Martinez, program manager for IDC's European Enterprise Server group. "Suppliers need to think more about how to replace older systems and about their existing customer base as a franchise, rather than just pushing the features, functions, and prices of newer server types."

The Western European server market contains 5.5 million units worth *17 billion, with HP and IBM products representing 59% of the installed base.

Replacement and upgrade issues are therefore key to tapping into this type of mature market. IDC's study, European Server Installed Base Market Shares and Forecasts 2004-2009, examines the reasons why most vendors are facing difficulties accessing this important franchising opportunity.

"The constant adoption of new technology, and downward price pressure, is making the server market more commodity-like. Vendors should focus on new markets, such as Linux or Itanium, to compete successfully," said Martinez.

"Each year's spending on servers in our region is a significant proportion of the asset value of all servers installed (71%)."

The strong rise in server replacement rates in 2009 will also give way to an interesting new development, as the European Union implements the Waste Electronic and Electrical Equipment (WEEE) legislation. This legislation makes vendors responsible for the disposal of products at the end of their life cycle. The study explains why suppliers should take a strong interest in this area in the coming years.

This IDC study is based on results from IDC's Quarterly Server Tracker (QST) and Quarterly Server Forecast (QSF). Installed base numbers have been prepared using IDC's tracked server shipments dating back to the early 1980s.

The study maps the life cycle of servers in detail, examining the European server installed base and asset value market shares in 2004 by vendor, country, CPU, server class, and form factor. It also provides forecast data and predictions for the period to 2009.

For more information on European Server Installed Base Market Shares and Forecasts 2004-2009 (Doc #G10M, December 2005), or any of IDC's other server research programs, please contact Terry Cummings on +44 (0) 20 8987 7231, email tcummings@idc.com. Alternatively, contact your local IDC office or visit www.idc.com .

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

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