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Server revenues in EMEA region drops 10.5% in Q1

Revenue generated from server sales in the Europe, the Middle East and Africa (EMEA) region has reached $2.8bn during the first quarter of 2013, a 10.5% drop over 2012, reporting a sixth consecutive quarter drop since fourth quarter of 2011, according to IDC’s latest report.

The latest EMEA Server Tracker revealed that EMEA server shipment also dropped 5.7% to 520,000 units.

IDC EMEA Enterprise Server Group research manager Giorgio Nebuloni said despite product launches by major vendors and ever-improving value for money, systems based on RISC and EPIC processors, typically supporting traditional Unix environments, have struggled to keep afloat, with yearly revenue declines of around 40%+.

"Part of the spending intended to keep core business applications running is now absorbed by new integrated system offerings combining x86 and lower-end RISC/EPIC blades with storage and networking back-ends," Nebuloni said.

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"It appears now that alongside integrated multisocket platforms built around specific workloads, such as SAP HANA appliances, the integrated system area will become the key battlefield for all enterprise system vendors that want to generate gross margins above 30%."

During the quarter, revenues generated by x86 and non-x86 servers dropped by 1.5% and 34.8% respectively, while x86 server sales captured 80.4% of the overall sales in EMEA.

Volume servers declined 3.4% during the quarter, while midrange and high-end servers dropped by 14.6% and 33.3% respectively, depicting sixth quarter of declines for volume and midrange servers, and the seventh quarter for the high end.

IDC EMEA Enterprise Server Group senior research analyst Beatriz Valle said that the transition to x86 accelerated during the quarter.

In Western Europe, annual demand for x86 servers was almost flat, with revenue down 0.9% while sales of non-x86 legacy architectures dived by 35.7% year on year," Valle said.

"RISC sales were particularly hit, down by 49.8% year on year, whereas mainframe revenue suffered single-digit declines of 4.8%.

"Big organisations in the corporate space and government are consolidating existing infrastructure using high-end x86 servers, with demand for legacy architectures at an all time low."

However, the Central and Eastern Europe, the Middle East, and Africa (CEMA) reported a third consecutive drop in 1Q, with server revenue reaching $685.03m, down 9.7% year-on-year due to weakening economic conditions in Europe and drop in demand for Unix servers.

IDC CEMA research manager Jiri Helebrand said that the Central and Eastern Europe [CEE] subregion was down by 12.9% to $348.09 million, mainly pulled down by lacklustre server sales in Russia.

"Positive developments were seen in Poland, Czech Republic, and Hungary," Helebrand said.

"The Middle East and Africa [MEA] subregion fared slightly better than the CEE and Western European regions, but revenue was also down.

"Indeed, $336.94 million represented a year-on-year decline of 6.1%, impacted by weak performance in Israel and South Africa. In contrast, Saudi Arabia and United Arab Emirates recorded double-digit growth."

In addition, revenues generated by blade servers reached $601m in EMEA, a 5.0% drop, in spite of large deals in commercial HPC in France, while the density optimised servers reported 103.3% growth, accounting for $124m of revenue.

However, density optimised servers, which remained the fastest -growing form factor, doubled its share of EMEA server revenues from 2% in 1Q12 to 4.4% in 1Q13.

IDC EMEA Enterprise Server Group research analyst Andreas Olah said the share of modular server shipments in EMEA increased from 19.9% in 1Q12 to 22.7% in 1Q13.

"This growth has been driven by the increasing popularity of density optimised servers particularly in the HPC area, with investments from large businesses across verticals such as manufacturing and finance, but also the public sector and in large cloud service providers," Olah said.

"Traditional tower servers are also increasingly being replaced by modular servers, while blades have started to lose their edge as the technology matures and density optimised servers increasingly take over higher-end workloads.

"Modular server shipments have grown across the Nordics and Austria, while a large deal with a cloud services provider in Ireland more than tripled density optimised shipments into that country".

Simultaneously, the key markets of Germany, the UK, and France reported drop in modular shipments corresponding to the overall drop in server shipments.

Revenues generated by Windows and Linux operating systems dropped by 1.7% and 1.9% respectively, while Windows captured 57.1% of the total market, with Linux surpassing overtook Unix, with 22.7% against 10.4% of the total and mainframe z/OS dropped 13.8% in 1Q13.

HP topped the list during 1Q13, followed by IBM, Dell, Fujitsu and Oracle.
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CBR Staff Writer

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