Asia server market set for slowdown

Credit crunch will cause server demand in the Asia-Pacific region to drop this quarter and "shave a few" percentage points off growth next year, says analyst.
Written by Vivian Yeo, Contributor

The Asia-Pacific server market will suffer a slowdown as a result of the current economic climate, an analyst has confirmed.

Rajnish Arora, IDC's Asia-Pacific research director for enterprise servers and workstations, said in an interview Friday that while the region's server market continued to grow in the third quarter, the ongoing credit meltdown will "shave a few percentage points off growth for 2009".

The bleak economic situation is going to put pressure on companies and drive them to reevaluate their budgets, said Arora, adding that businesses in the region will further scrutinize criticality and timelines of IT projects.

The analyst noted that as customer bookings for servers are typically made about six to eight months before deployment, the first signs of slowdown in purchases will occur in the fourth quarter--with the full impact felt only in the first quarter of 2009.

Research firm Gartner also noted this week that companies in the Asia-Pacific region are "expected to delay computer hardware upgrades and large technology projects". Under a worst-case scenario, the analyst expects IT spending in the region to grow 8.3 percent in 2009 to US$585.7 billion, compared to its previous growth estimate of 11 percent.

According to Gartner, IT hardware would be the hardest hit by the decline in spending.

Despite the financial crunch, Chinese hardware manufacturer Lenovo this week proceeded with its plans to unveil new products in the region.

Ronnie Lee, Lenovo's country general manager for Singapore and Brunei, said there is "no perfect time" to launch the company's new line of servers.

Speaking to media Friday at the launch event of Lenovo's ThinkServer range in Singapore, Lee said the company's servers and their bundled features, such as priority support services, were of greater relevance to businesses in the current economic climate, especially where companies may not have sufficient resources to handle complex machines or have smaller budgets for system maintenance.

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