The global server market could be headed for a slowdown this year, market researcher IDC has predicted, despite one of the strongest years ever in 2007.
Server revenue in 2008 could be one of the victims of the global economic slowdown precipitated by the housing and mortgage crisis in the US, IDC said.
"The impact of the economy on the IT infrastructure market will depend on the duration and severity of the downturn," said Matt Eastwood, group vice president at IDC.
"Some projects may well be deferred and this could have some impact on the market and flatten out growth during 2008," Eastwood said, although he didn't expect a massive reduction in server spending.
On the other hand, Eastwood said, slower spending could give legs to initiatives such as consolidation of IT resources and virtualisation, which have fairly short paybacks and high return on investments. "These types of projects will be largely recession-proof particularly in the enterprise space," he believed.
Concerns for a server market slowdown in 2008 come on the heels of strong revenue growth in 2007, which was driven by increased IT spending and a growing adoption of x86 and blade servers.
Server revenue hit US$15.65 billion (£7.8 billion) in the fourth quarter, boosting 2007 to its highest level since 2000, said Jean Bozman, research vice president at IDC.
Full year server revenue reached $54.42 billion (£27.3 billion), the highest since 2000’s $61.6 billion (£30.9 billion) - just before the dotcom bust. Worldwide server unit shipments for 2007 were 8 million, an increase of 6.7 percent from the previous year.
IBM topped the 2007 full year server revenue rankings at $17.3 billion (£8.7 billion), for a 31.9 percent market share and 1.1 percent yearly growth. HP was second at $15.4 billion (£7.7 billion) in revenue, followed by Dell, which had $6.15 billion (£3.09 billion) and recorded the strongest yearly growth, 12.4 percent.
The fourth quarter of 2007 was the seventh straight quarter in which server revenue posted gains, Bozman said. It was driven by a rapid rise in blade server revenue, bucking a declining trend against high-end and mid-range servers.
Though Windows OS servers generated the largest quarterly revenue, Linux-based servers grew the most in terms of revenue, according to IDC. Linux-based servers generated $2 billion (£2.8 billion) in revenue, growing 11.6 percent year-over-year and representing 12.7 percent of market share. Windows server revenue was $5.7 billion (£2.8 billion) for the quarter, a 36.6 percent market share and 6.9 percent growth. The revenues were all-time highs for both platforms, IDC said.
Unix server revenue grew only 1.5 percent to $5.2 billion (£2.6 billion). The growth was mainly driven by IBM's strong System p business, IDC said.
Revenue for x86 servers was $7.8 billion (£3.9 billion) during the fourth quarter, a 7.6 percent year-over-year increase. HP led in x86 server revenues, with 35 percent, followed by IBM and Dell, with 20 percent apiece.