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For Worldwide Servers, Q1 Was a Train Wreck

The worldwide server market suffered another ugly quarter, according to reports issued this week by IDC and Gartner.

IDC's report, released Wednesday, was the grimmer of the two. The Framingham, Mass.-based research firm found server revenues fell by 7.7 percent in the first quarter of 2013 compared to the same period in 2012. In all, server sales amounted to $10.9 billion, down from $11.8 billion. IDC also reported that server unit shipments fell by nearly 4 percent to 1.9 million units.

Leading the way down were market leaders HP and IBM, with revenue declines of 14.8 percent and 13.4 percent, respectively.

Gartner's findings, released a day earlier, were that revenues dropped 5 percent to $11.8 billion from $12.4 billion and shipments fell a little less than 1 percent to 2.3 million units. Gartner's reckoning has IBM, rather than HP, as the market revenue leader, although the Stamford, Conn.-based market research firm reported nearly the same revenue declines for both server makers as IDC reported.

The hardest-hit company in percentage terms was Oracle with a revenue drop of either 26 percent (IDC) or 27 percent (Gartner).

Some vendors managed to execute well despite the brutal market. Relative server-market newcomer Cisco enjoyed soaring revenues with growth of 35 percent to $450 million for the quarter, according to IDC. That was good for a three-way tie for fourth place in the global server market with Fujitsu and the fast-dropping Oracle.

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Also growing in the quarter was Dell, which saw revenues increase 10 percent, according to IDC, and 14 percent, according to Gartner. Both analyst firms put Dell's market share at 18 percent. The gain for the No. 3 worldwide server vendor, combined with the sizable drops by IBM and HP, put Dell in a much closer third place than it was a year ago. It will be interesting to see if Dell can continue to execute amid the corporate ownership turmoil of the second quarter.

The Windows end of the server market largely held steady for the quarter. IDC estimated that Windows server hardware revenue declined 4 percent to $5.7 billion. But even with that drop the platform picked up 1.9 points of market share to reach 52.2 percent.

Posted by Scott Bekker on May 30, 2013