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Recession hits APAC server shipment

Fourth-quarter Asia-Pacific server shipments dip 5.8 percent year-on-year, with emerging markets taking bigger hit, according to Gartner figures.
Written by Eileen Yu, Senior Contributing Editor

The economy blues have hit the Asia-Pacific server market, which saw a 5.8 percent decline in shipments after clocking 27 quarters of strong growth, according to figures from Gartner.

In a report released Monday, the research firm said the fourth quarter 2008 dismal showing also saw revenue dip 14.8 percent over the same quarter in 2007. Mature markets including Hong Kong, Singapore and Taiwan, saw double-digit declines in the fourth quarter as well as for the full year 2008. India and Korea, for instance, saw their server revenue fall by 18.1 percent and 28.3 percent, respectively. Revenue in Greater China dipped 6.7 percent, while the Southeast Asian region registered a collective fall of 15.2 percent.

Erica Gadjuli, Gartner's principal research analyst, said in the report: "The poor fourth quarter results did not totally negate the overall increase in shipments for the year, as Asia-Pacific ended the year on a positive note with growth of 6.5 percent.

"However, revenue for the year fell by 2.8 percent," Gadjuli said. "The decline in IT spending that first showed itself during the third quarter, gathered steam in the fourth quarter in Asia-Pacific under the impact of global economic recession."

In terms of server revenue, IBM remained the region's market leader, raking in US$793.7 million in the fourth quarter. Hewlett-Packard clocked in at second with US$589.9 million, followed by Dell Computer at US$180.8 million, Sun Microsystems at US$170.6 million and Lenovo with US$309.5 million. Together, these five vendors contributed 92.8 percent of the region's revenue for the fourth quarter, or 92 percent for full-year 2008. All five companies held the same rankings in 2007.

According to Gartner, there was fierce price competition among x86 server vendors across the region, particularly in high-end server platforms. Revenues in this segment plunged 17.7 percent, while shipments fell 5.4 percent year-on-year.

Blade servers were the bright spark in the market, growing by 13.5 percent in fourth-quarter shipments, closing the year with 49 percent growth.

Worldwide, server shipments for the quarter fell 11.7 percent while revenue dipped 15.1 percent, Gartner said.

Heeral Kota, Gartner's senior research analyst, noted: "Almost all segments exhibited similar behavior as users sought to reduce costs and spending, deferring projects where possible.

"The outlook for 2009 is a very challenging one, with the pattern of the fourth quarter more indicative for the level of demand in 2009 than seen in 2008 as a whole," Kota said. "The server market already has high levels of vendor consolidation, but the conditions expected during 2009 will increase the threat of further consolidation."

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