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Worldwide Computer Server Market Upside

According to IDC's latest market study, revenue in the worldwide computer server market grew 6.4 percent year over year to $13.9 billion in the second quarter of 2008 (2Q08). This is the ninth consecutive quarter of positive revenue growth and the highest Q2 server revenue since 2000.

Unit server shipments grew 11.1 percent year over year in 2Q08 driven by a sustained refresh cycle and an expansion of infrastructures across enterprise, SMB, and cloud computing environments.

Although volume systems revenue grew 2.1 percent in 2Q08, they underperformed the market for the first time since 4Q06 as server OEM's experienced strong pricing pressure in the marketplace.

Revenue for midrange enterprise servers increased 1.5 percent year over year and the high-end enterprise server market showed a 22.1 percent increase year over year. This is the second consecutive quarter that the high-end enterprise segment has outperformed the volume and midrange enterprise market segment.

"Customers around the globe continue to deploy a wide range of technologies to meet their computing needs and as a result IDC saw strong growth in blades, Unix systems, and IBM System z demand across the marketplace. Diversity in market demand demonstrates customers do not believe a single standardized infrastructure is capable of meeting all their computing needs," said Matt Eastwood, group vice president of Enterprise Platforms at IDC.

"At the same time, the pricing challenges many OEMs experienced, particularly in the x86 server market, is a concern as it may foreshadow a slowdown in market demand as enterprise budgets face further scrutiny in the second half of 2008."

The refresh cycle in the midrange and high-end segments is part of the IT transformation cycle that is continuing as older, scalable systems (with 4 sockets, 8 sockets, or more) are being replaced, either by new scale-up servers or by groups of scale-out servers.

The growth in midrange and high-end servers this quarter shows that customers still see value in leveraging these scalable servers, with built-in high availability and RAS features, for some of their most mission-critical workloads and for workload consolidation.

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