IBM server sales slump by 25 per cent in the first quarter as competition intensifies

IBM sales meltdown as global server unit shipments increase by 1.4 per cent, according to Gartner

IBM suffered a 25.6 per cent slump in server sales in the first quarter of the year, with revenue falling by more than $770m, enabling HP to become global market leader, according to the latest figures released by analyst group Gartner.

The sales crunch at IBM coincided with the sale of its low-end x86 server business to Chinese PC manufacturer Lenovo, which has yet to be closed. The deal, agreed in January, was supposed to be completed by the end of July, but is now expected to take longer.

Jeffrey Hewitt, research vice president at Gartner, described first quarter growth as "relatively weak" and added that all regions showed a decline in either shipments or revenue except for Asia/Pacific, which posted a 3.3 per cent increase in revenue and an 18 per cent increase in shipments.

In Western Europe shipments declined by 4.8 per cent, but revenues rose 6.7 per cent, said Hewitt.

He continued: "x86 servers managed to produce an increase with growth of 1.7 per cent in units for the year and 2.8 per cent in revenue. Risc/Itanium Unix server sales fell globally in the first quarter of 2014 - down 19.9 per cent in shipments and 16.9 per cent in [terms of] vendor revenue compared with the same quarter last year.

"The 'other' CPU category, which is primarily mainframes, showed a decline of 37.6 per cent year over year in terms of revenue," said Hewitt.

In total, global server sales fell from $11.84bn to $11.36bn, a decline of 4.1 per cent, according to Gartner.

The biggest winners, according to Gartner, were Cisco Systems, which enjoyed a 37 per cent increase by revenue in server sales, and Chinese manufacturers Huawei and Inspur, which have benefited from the cloud cast by US National Security Agency (NSA) whistleblower Edward Snowden, who has revealed that the US security agency had been tampering with exports of American-made computing hardware in order to implant bugging devices.

The EMEA region, meanwhile, continues to be dominated by HP, which claims a 39.2 per cent market share in terms of unit shipments, with Dell a long way behind in second place with a share of 20.9 per cent - with sales falling by a hefty 13.3 per cent, while IBM's sales fell by almost one-third to take a market share in EMEA of just 7.1 per cent.