Abstract
Business enterprises have responded to the uncertainty that has plagued the worldwide economy in 2007 by cutting their expenditure on IT, causing the rate of growth in worldwide server shipments to slow. Servers now constitute a mature market; the introduction of multi-core and virtualization technology for server CPUs has not led to any significant increase in demand. It can be anticipated that the slow growth in the server market will continue through the second half of 2007, and for some time to come. This report will analyze the major trends in the worldwide server market in the second half of 2007, and the outlook for the future.
In the second half of 2007, demand for servers in the key US market is being affected by the impact of the sub-prime mortgage crisis, which has held back economic growth. In other mature markets, such as Western Europe and Japan, financial-year-end IT purchasing increased only slightly compared to 2006. On the other hand, demand for value-line servers has remained strong in emerging markets in Asia and other parts of the world. Overall, worldwide server sales will display slow but steady growth in the second half of 2007.
On the supply side, the adoption of multi-core and virtualization technology for x86 servers has made it possible for a single server to provide the same level of performance that in the past would have required several servers. With no new killer applications being introduced, the improvements in x86 server technology have done little to stimulate shipment growth. Whole-year shipment volume growth in 2007 is expected to lower than full-year 2006, and it is anticipated that growth rates will continue to slow down in the future.
Taking all of the factors outlined above into account, worldwide server shipment volume in the second half of 2007 is forecast to reach only around 4,277,000 units. This represented a year-on-year growth rate of just 6.42% compared to the second half of 2006, and a growth rate of just 5.53% compared to the first half of 2007. Whole-year shipment volume in 2007 is expected to reach only 6.5% as compared to full year 2006.
With multi-core and visualization technology having improved server performance to the point where it is now able to satisfy the needs of the vast majority of users, worldwide server shipment growth in 2007 will have been lower than as compared to 2006 and previous years; the whole-year shipment growth in 2007 will reach only around 5% to 6.5%.
Glossary of Terms
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ODM |
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Original Design Manufacturing |
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OEM |
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Original Equipment Manufacturing |
List of Companies
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AMD |
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Dell |
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Fujitsu |
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HP |
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IBM |
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Intel |
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Silicon Graphics |
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Sun |