IDC: A-P server sales still falling sharply

Third-quarter server sales revenue in most countries in the Asia-Pacific (excluding Japan) region was down more than 20 percent from the same period a year earlier, according to figures released Wednesday by research organization International Data Corp. (IDC). In most of these countries, revenue was also down compared to the second quarter, IDC said.

Worst hit were Australia, Singapore, Korea, Taiwan and Hong Kong, where server revenues in each case were down 30 percent or more from the same quarter last year. Malaysia, Indonesia and New Zealand saw less severe revenue falls, while China bucked the trend with 20 percent year-on-year revenue growth.

China's growth was due to that country's rapid expansion of the telecommunication sector and infrastructure investments by the government, IDC said.

Regional revenue for the third quarter reached US$1.3 billion compared to 1.6 billion in the third quarter of 2000, according to IDC. Overall 2001 server revenues will dip below $6 billion, before staring a gradual recovery next year, IDC said.

The sharp drop in revenue is a combination of falling sales and lower prices, according to IDC, which estimated that third-quarter unit sales were down 4 percent from the same quarter the previous year.

Market uncertainty is causing the postponement of many major projects that were in the pipeline before the Sept. 11 attacks on the U.S., according to IDC. Shrinking demand will cause further price erosion and greater pressure on vendors in the months to come, IDC said.

Although world events are still in a state of some confusion, the best guess is that the U.S. economy will start recovering in the second half of 2002, which means Asia-Pacific economies will bounce back by late 2002 to early 2003, IDC said.

According to IDC, server demand will mainly be driven by business processing such as electronic commerce, CRM (customer relationship management) and ERP (enterprise resource planning), custom applications (core banking and telecom billing), IT infrastructure spending (file/print, load balancing, proxy and security) and collaborative applications (e-mail and workgroup).

According to Gartner Inc.'s Dataquest unit, IBM Corp. is the leading server vendor in the region, with a 19 percent market share, followed by Hewlett-Packard Co. at 18 percent. Both these vendors increased their market share from the previous quarter.

The third-largest server vendor is Compaq Computer Corp., formerly the market leader, which saw erosion of its market share from 21 percent in the second quarter to 16 percent in the third quarter, according to Dataquest figures. Dell Computer Corp. achieved double-digit market share for the first time, Dataquest said.

(IDC is a subsidiary of International Data Group Inc., the parent company of IDG News Service.)

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