Server market dropped 5.2 percent in Q3 2008

IDC reports that the worldwide server market declined 5.2% compared to the same quarter in 2007. In Q3 2008, the market posted revenue of $12.6 billion worldwide. The decline in revenue for the quarter is the largest quarterly decline since Q4 2002. Despite significant decline in revenue, server shipments grew by 2.8% compared to Q3 2007. The quarterly growth is the smallest seen since Q4 2006 according to IDC.

Further breaking down the global server market, IDC reports that volume server systems revenue dropped 7.2% compared to last year marking the first decline in the segment in over 14 quarters. The midrange server market saw revenue decline by an even larger 9.5% compared to last year. Not all was negative for the server market though as high-end server systems saw revenue grow by 4% compared to 2007.

IDC's Matt Eastwood said in a statement, "The server market experienced significant deceleration in the third quarter with particular weakness in September. The slow down impacted a wide range of traditional server technologies with improved demand for blades and IBM System z notable exceptions. Many OEMs experienced significant pricing challenges in the quarter and revenue declines were experienced in all regions except Latin America and the Middle East and Africa (MEA). Enterprise budgets continue to face increased scrutiny as IT organizations of all types look to run their hardware harder and defer acquisitions wherever possible."

IDC broke out market standings per company for the quarter and reports that HP and IBM ended Q3 in a statistical tie with 30.7% and 30.2% of the market respectively. HP's revenue dropped 2% from the same quarter last year, despite improvements in revenue from blade servers. IBM saw its overall revenue drop 3.1% from last year.