European server sales set to recover

The European server market is starting to show signs of a revival, claims analyst Dataquest.

Sales of servers grew slightly in the third quarter of this year, after two quarters of declining sales following the millennium switch.

According to Dataquest, a division of analyst Gartner, 267,000 servers were shipped in Europe, compared to 256,000 in the same period last year, an increase of just four per cent but the first gain recorded this year.

"The pre-year 2000 spike in demand for servers in 1999 saw shipments soar to unprecedented heights at that time, and the market is only now showing signs of a rebound," said Karen Benson, principal analyst at Gartner Dataquest.

"Although four per cent growth is a far cry from the 30 per cent plus growth we witnessed in the first half of 1999, it is deceptive in that it hides underlying pockets of strength in several major services-led European markets, including the UK, and the Nordic countries," she added.

However, this increase was not evenly shared among all manufacturers. While Compaq is still the leading server vendor in Europe, it has seen its market share fall from 34 per cent to 32 per cent as sales declined slightly.

By contrast, rival Sun Microsystems saw sales double in the quarter, with total units shipped rising from just under 11,000 to over 22,000. Sun has done well on the back of ebusiness, with its servers being heavily used to support websites.

IBM and Dell both gained a point in their market share, rising to 19 per cent and 11 per cent respectively. Hewlett Packard (HP) fell by one point to 13 per cent, but kept its position as number three in the market.

Shares in Sun, HP and IBM all rose on back of the figures from Dataquest. Overall, the UK market was cited as showing above average growth for the period.

Sales of Unix servers on Risc-based systems rose 43 per cent in the quarter, while sales of Intel-based servers rose by just one per cent. Intel chairman Andy Grove blamed poor European sales for the company's weak financial performance.

Benson said she expected the trend towards Risc systems to continue. "Companies are starting to rethink server deployment, and we're beginning to see server specialisation to accommodate varying requirements from dotcoms, telcos and service providers. Front-end web and back-end engines are creating a strong demand for powerful, reliable Unix systems," she said.

The report also indicates that server consolidation is continuing, with the top six vendors accounting for 91 per cent of the market, leaving smaller players increasingly overshadowed.

According to Dataquest's figures, the worldwide server market is also growing, with a 16.5 per cent rise in server sales in the third quarter.