Server market picks up pace, slowly

A sluggish local server market is set to pick up in the second half of 2002, say industry analysts.

After a turbulent 18 months, and a slow start to the year, the server market is finally emerging from a slump with an expected slight upswing in activity during the final six months of 2002, according to industry analyst IDC.

However, the growth won't "break any land-speed records", IDC senior analyst for servers and workstations, Tom Minarik said.

Improving economic conditions and renewed activity in key vertical segments will boost sales in the second half of 2002 with IDC forecasting growth of 2 per cent year on year. Revenue in the first half of 2002 declined by 3 per cent year on year.

"Some focus on infrastructure outlays in telecomms and government segments, as well as an increasing interest in high performance computing capabilities by corporations will be enough to see the market move out of reverse and into first gear," Minarik added.

"We are not out in the clear just yet, but given an improving economic forecast and higher demand expectations, early 2003 should see a return to healthy growth for the Australian server market," Minarik said.

According to IDC, companies commonly over-provisioned in their purchasing decisions prior to the dotcom crash in 2001.

"The dotcom crash brought about a rethink by end users on how best to use server infrastructure and maintain a low total cost of ownership."

"End users have focused efforts on consolidation and lowering IS [information systems] costs rather than expanding capacity and this has increased the level of competition in the server market.

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