CEE Revenue Growth Prompts Spike in EMEA Server Market Revenues, Says IDC

LONDON and PRAGUE – February 29, 2008 – According to IDC's EMEA Quarterly Server Tracker, the server market experienced its highest dollar revenue levels since IDC started tracking consolidated server sales in EMEA in 1Q00. Boosted by a weakening of the dollar/euro exchange rate, server factory revenue grew by 3.6% in annual comparison, to $5.46 billion, while shipments rose 7.3%, to more than 750,000, in 4Q07 over 4Q06 in EMEA. This marks the sixth consecutive quarter of positive annual growth when measuring factory revenue performance in dollars, and comes on the back of a strong year. For the whole of 2007, market growth was robust, with factory revenue rising 5.6% annually, to reach $17.86 billion, and shipments growing 8.9% to over 2.6 million.

Virtualization, along with systems management and automation, is driving IT investment in midsized companies as well as large enterprises. "The diversity of workloads running on customer sites is driving demand in all top 3 operating systems, with Windows significantly increasing its market share to 35.7% of the total revenue in 4Q07, three percentage points ahead of Unix. The full impact of Windows Server 2008 will only become apparent by the end of this year, and the battle for the virtualization market, with new management tools by the leading vendors, will spur competition in this area," said Nathaniel Martinez, director, European Enterprise Servers at IDC and lead analyst for IDC's virtualization practice in EMEA.

Multicore, virtualization, and blades are all contributing to the strong uptake of volume servers, which are gaining favor with SMB and enterprise customers alike, a market trend translated into a factory revenue share of 49.6% of the total in EMEA in 4Q07 and a growth of 6.5% annually.

"Both revenue and unit growth were driven by an increasing demand for more highly configured x86 servers, used for virtualization and consolidation projects in a wider range of industries and customer segments," said Beatriz Valle, research analyst of European Enterprise Servers at IDC. "Sales of non-x86 servers experienced a slight recovery quarter on quarter, due to favorable seasonal factors and corporate renewal projects, but dropped 2.4% annually. x86 servers meanwhile increased their presence in the high-end server space."

With revenue growth driven mainly by emerging markets and more specifically CEE, Stefania Lorenz, IDC systems research director for the CEMA region, said, "2007 proved to be another banner year in the CEMA region with factory revenue growing 18.3% and shipments 15.8%. Although the year did not end with a bang, it did end on a high note. 4Q07 saw factory revenue climb 17.3% year on year, with shipment volume increasing 14.3%, generated by strong demand for both x86 and non-x86 platforms, and with midrange servers driving spending as firms continued to renew their IT infrastructure. Blades continue to gain market share in both CEE and MEA at the expense of non-rack optimized servers."

IDC Top Server Market Findings

x86 servers saw their revenue market share grow from 45.9% in 4Q06 to 49% in 4Q07. Servers running on EPIC increased revenue market share by 1 percentage point to 8.5%, while RISC and CISC lost market footprint.

RISC continues to be the strongest segment after the x86 space, with 30.4% of the total market.

Sales of Windows and Linux grew 12.8% and 8% respectively. While Unix performance remained strong, growing revenue by 3.1% annually, it is Windows that is now the clear market share leader with 35.7% or the total EMEA revenue.

Both z/OS and i5/OS saw their revenue decrease by 9.1% and 3.9% respectively.

Blades growth continued unabated with sales going up 55% annually and approaching the half-billion dollar mark. Pedestal servers are the single most important segment with 50.2% of the total revenue in 4Q07, despite negative annual revenue growth.

Server Vendor Highlights

Though IBM managed to retain the top spot in the calendar quarter, HP emerged as the top vendor in 2007 with strong growth of 12.3%, managing to eclipse IBM for the first time on an annual basis since the acquisition of Compaq.

HP's growth in 4Q07 was strongest in the ProLiant and Integrity areas, with Integrity revenue, including its NonStop products, now accounting for 24.6% of the total vendor revenue.

IBM benefited from a robust uptake of both its Unix System p and x86 System x families in the last quarter of the year.

Fujitsu Siemens Computers enjoyed very positive Primergy performance in southern Europe and finished the full year with a 1.8% revenue growth.

Sun Microsystems saw revenue grow strongly in the SPARC Enterprise area, and Dell had strong growth across all geographies, particularly in France and Spain.

Top 5 EMEA Server Vendors 4Q07 (Revenue in Millions)

Vendor 4Q06 Factory Revenue 4Q06 Market Share 4Q07

Factory Revenue 4Q07 Market

Share 4Q07/4Q06 Growth

IBM $1,974 37.4% $1,966 36.0% -0.4%

Hewlett-Packard $1,631 30.9% $1,752

32.1% 7.4%

Sun Microsystems $554 10.5% $586

10.7% 5.7%

Dell $380 7.2% $425 7.8% 11.9%

Fujitsu Siemens $357 6.8% $340 6.2%


Others $378 7.1% $394 7.2% 4.3%

Total market $5,274 100.0% $5,463

100.0% 3.5%

Source: IDC, 2008


Top 5 EMEA Server Vendors 2007

(Revenue in Millions)

Vendor 2006 Factory Revenue 2006 Market Share

2007 Factory Revenue 2007 Market

Share 2007/2006 Growth

Hewlett-Packard $5,412 32% $6,078

34.0% 12.3%

IBM $5,604 33.1% $5,580 31.2% -0.4%

Sun Microsystems $1,985 11.7% $2,092

11.7% 5.4%

Dell $1,309 7.7% $1,508 8.4% 15.3%