European server sales continue mixed progress: Sales numbers up, revenue down

Analysts at IDC see the server market in Europe declining in a stable way apart from some mega-datacenter projects.
Written by Colin Barker, Contributor

The European server market is continuing in a steady decline, according to analysts at IDC, with server sales dropping to $3.7bn in the fourth quarter of 2013, down 5.2 percent when compared to the fourth quarter of the year before, 2012.

This decline was not quite reflected in the decline in shipments, which was a more minimal fall of 0.3 percent, or 606,548 units, over the fourth quarter of 2013. As IDC put it: "The more significant decline in revenues rather than in units, compared with the same quarter last year, is a sign of continuing price sensitivity at times of economic uncertainty and ongoing price competition, particularly at the lower end of the market."

Quarter-on-quarter performance displayed a more positive picture with moderate double-digit growth in volumes shipped, which were up 13.2 percent, and revenue showing strong growth of 28.5 percent. But this can also be misleading as quarterly figures can be subject to wide fluctuations.

Lower sales figures for the quarter were reflected in the figures for the full year: EMEA server revenues reached $12.4bn for the full year of 2013, which showed a moderate annual decline of 5.3 percent.

IDC was quick to point out its belief that the decline in unit terms was less significant, at 2.7 percent, with more than 2.2 million server units shipped in 2013. "Despite the negative growth the market has improved compared with the stronger annual declines of 9.6 percent in revenues and 5.0 percent in units in 2012," IDC said in the report.

It was another mixed story in the market for x86 servers with a year-on-year growth of 3.7 percent in revenue despite a 3.7 percent decline in units sold, reflecting what IDC EMEA analyst Giorgio Nebuloni described as, "the ongoing shift toward higher-end servers with upgrades to models that feature the latest-generation x86 processors".

The Western European market continued to reflect what IDC called "the general trend toward x86 servers", which generated sales of $2.1bn and showed moderate annual growth of 5.7 percent. So while the x86 market fared not too badly, the market for other servers (non-x86) saw its revenue decline by nearly a quarter, 22.8 percent, to $710 million.

Despite the encouraging performance on the x86 side, the overall Western European server market shrank 3.5 percent in the fourth quarter of 2013 compared with the same quarter in 2012.

Although the figures show general decline, according to IDC research analyst Andreas Olah, they were not as bad as they could have been. "Large datacentre build-outs by global cloud service providers and social networks accounted for a significant chunk of growth in Western Europe that is most notable in the Nordic region," he said.

This led to a greater rise in the number of shipments as opposed to revenues from them because of large deals of commodity servers at low prices from Asian ODMs as well as major server vendors.

One of the problems, he said, was that several countries that saw large shipments to mega-datacentre customers in the previous year experienced a decline in the fourth quarter of 2013 and these included the Netherlands, Ireland, and Belgium.

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