UK server revenues sink despite sales surge

A two-year high in UK server shipments sounds like a positive sign for the IT industry's health, but the underlying trend is less encouraging, says IDC

Unit shipments of servers in the UK were their highest for two years, according to new research, but this growth doesn't necessarily mean that Britain's IT industry is recovering.

A study from researchers IDC released on Tuesday found that server unit shipments for Q1 were up 12 percent compared to the same quarter the previous year, hitting 65,000.

But at the same time revenues dropped 11.7 percent year-on-year, as the average value of servers sold in the UK plummeted 21 percent. The figures show that the UK's IT industry is still struggling to recover from the dot-com crash, according to IDC. Smaller businesses are increasing their spending on lower-end servers, but the traditional big spenders of the UK server market -- telecoms and finance -- are still in the doldrums.

In the meantime, the rest of Europe is picking up, according to research from IDC rivals Gartner issued last week. Server shipments for Europe, the Middle East and Africa (EMEA) for the second quarter increased 21 percent sequentially to 373,000 units, continuing the positive momentum of recent quarters, Gartner said.

High-end server sales remain relatively strong in Europe, with a decline in average server value of only 10 percent on average across the region, IDC said. "The UK has been particularly badly hit by the downturn in spending," said IDC vice president Martin Hingley, in a statement. "The growth in lower-cost servers and dramatically lower average system values demonstrates the comparative strength of the SMB (small and medium-sized business) sector."

HP kept its market leadership in the UK with 35.3 percent of the market, but its revenue fell 14.4 percent year-on-year. IBM increased its share to 23.5 percent. Sun Microsystems, which is having tough quarters in EMEA and globally, suffered the worst Q1 of any of the top vendors, with a 29 percent revenue decline, although it kept its No. 3 position with 17.9 percent of the market.

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