Roulston Technology Partner Timothy Prickett Morgan on Server Revenue Declines

December 10, 2012

The server racket continues to be impacted by issues throughout the global economy and intense competition between incumbent players, upstarts, and those making their own hyperscale boxes. Shipment growth is anemic, revenues were down, and it is very likely that profits were down even further, according to the latest data. In the quarter ended in September, the box counters at Gartner think that server makers pushed out 2.46 million boxes, an increase of 3.6 percent compared to the year ago period. But revenues actually fell by 2.8 per cent, to $12.6bn, during the three months. Not only is competition a factor, but all of the major RISC and Itanium vendors were in product transitions in the quarter and so was IBM with its System z mainframes. New generations of Power, Itanium, and Sparc processors are in various stages of introduction into the market, and that is no doubt holding many customers of Unix and proprietary operating systems back a little. Europe is certainly not helping any of the server makers. Gartner figures that EMEA had $2.96bn in total server sales in the third quarter, down 9 per cent, with shipments of 598,800 machines, off 2.8 per cent. As Adrian O’Connell noted, “The outlook for the fourth quarter in EMEA looks similar to what we have witnessed in the year so far, with constraints on demand limiting the market opportunity. Vendors are under constant pressure to deliver the most effective execution. With limited overall demand, they will have to consider competitive migrations as their best opportunities for growth and market share gains.” This year’s fourth quarter might not be an especially festive period for every server vendor.” To read the full article to hear Tim’s thoughts on IBM, Dell, HP, Oracle, and Cisco’s results and future outlook please visit

Tim Morgan is the Systems Editor of the UK based Register and is President and Editor in Chief of IT Jungle. He has been keeping a keen eye on the midrange system and server markets for 15 years, and was one of the founding editors of The Four Hundred, the industry’s first subscription-based monthly newsletter devoted exclusively to the IBM AS/400 minicomputer, established in 1989. For the past decade, Morgan has also performed in-depth market and technical studies on behalf of computer hardware and software vendors that helped them bring their products to the AS/400 market or move them beyond the IBM midrange into the computer market at large.

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