Low prices boost growing UK server market

HP fends off strong competition from IBM for vendor top spot

Despite a less than overwhelming economic picture, the UK server market is showing promising signs of growth, according to IDC. Although server shipments dropped during the second quarter of 2003, year-on-year growth was a healthy 14.5 per cent, with more than 60,000 servers being united with new owners for the last two quarters. The price of an average server sold in the UK during the second quarter of this year fell to $8,325 – a drop of 18 per cent compared to the corresponding quarter in 2002 – good news for consumers, but less so for vendors, as factory revenues were left down by 7.1 per cent to $535m. Although lower server prices are stimulating the UK server market, vendors are feeling the squeeze. Thomas Meyer, manager of IDC's European Server Group, said in a statement: "As vendors further decrease prices, capitalising in part on the favourable exchange rate conversions, this has a severe effect on margins, yet again forcing vendors to revisit their business." The worldwide server market is also coming out of the doldrums, with a nine-quarter decline finally coming to a halt, despite revenues growing just 0.2 per cent up on those of a year ago at $10.6bn. The top dog in the global server market is IBM with over 30 per cent of the market - a rise of over 10 per cent compared to last year, while in the UK, Big Blue is still playing second fiddle to HP, which retains the number one spot with revenue of $160m for the quarter. However, it's unlikely that IBM bosses will be crying into their beer over the results - its market share grew an impressive five per cent year-on-year and the company generated a second quarter revenue of $114, up $21m compared to the equivalent quarter in 2002.