HP, IBM Tie As Global Server Market Hits 12-Year Low

Market conditions worsened across all geographic regions in the quarter, as customers of all types pulled back on spending, an IDC report shows.

Hewlett-Packard and IBM tied in the first quarter for the top spot in the global server market, as industry revenue fell to its lowest level in at least a dozen years.

The two vendors each accounted for 29.3% of the market. Dell and Sun Microsystems also found themselves in a statistical tie for second place, said IDC, which calls a tie when there is less than a 1% difference in revenue.

Dell in the quarter accounted for 11% of the market, and Sun 10.3%. The latest IDC numbers were released Thursday, the same day Dell reported a 63% drop in profits and a 23% decrease in overall revenue in the first quarter. Fujitsu/Fujitsu Siemens came in last among the top five vendors with a 6.7% market share.

The overall server market declined 24.5%, compared to the first quarter of 2008, to $9.9 billion. The decrease was the third in as many quarters and the lowest quarterly server revenue since IDC started tracking the market 12 years ago. Server shipments fell 26.5% in the quarter from a year ago to lowest quarterly level in five years. The year-over-year drop was the largest ever, IDC said.

IDC analyst Matt Eastwood said market conditions worsened across all geographic regions in the quarter, as customers of all types pulled back on spending.

"Most enterprise organizations are deferring new IT procurements and instead focusing on extending server life cycles and improving existing asset utilization," Eastwood said in a statement. "IDC believes that while these strategies are effective in the near term, server demand will begin to improve in the second half of the year as customers begin to rebuild their IT capabilities in advance of a meaningful economic recovery in 2010."

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