| March 5, 2010
Worldwide server market rebounds
Factory revenue in the worldwide server market declined 3.9 per cent year over year to $US13.0 billion in the fourth quarter of 2009, according to IDC. Although this was the sixth consecutive quarter with a year-over-year revenue decline, it was the second consecutive quarter with sequential quarter-over-quarter revenue growth.
Worldwide server shipments increased 1.9 per cent to 1.9 million units in the fourth quarter when compared with previous fourth quarter. For the full year 2009, worldwide server revenue declined 18.9 per cent to $US43.2 billion when compared to 2008, while worldwide unit shipments declined 18.6 per cent to 6.6 million units.
On a year-over-year basis, volume systems experienced the sharpest rebound with 9.9 per cent revenue growth. Demand for midrange servers (servers priced between $US25,000 and $US250,000) improved with a year-over-year factory revenue decline of 5.3 per cent. The slowdown extended to the high-end segment where factory revenue declined 23.6 per cent when compared to the previous fourth quarter as several product refresh cycles planned for early 2010 stalled market demand. This is the first time since the third quarter of 2008 that all three server segments have not experienced a year-over-year revenue decline in the same quarter.
"Market conditions improved significantly in the fourth quarter as the marketplace transitioned from recent stability to growth in several critical server segments. Customers are actively re-evaluating their IT needs and refreshing their infrastructures, and the fourth quarter represents the beginning of a market inflection", said Matt Eastwood, group vice president of IDC's enterprise server group.
"While many customers sat on the sidelines during 2009, significant innovation continued as server vendors prepared for an expanding market opportunity in 2010 and beyond. Optimal conditions for market inflection occur only once a decade and IDC believes that market shares could shift dramatically as the winners and losers of this new market cycle are determined, with those who are best positioned to meet increasingly sophisticated IT needs across the market gaining share".
IBM held on to the number one spot with 35.4 per cent market share in factory revenue for as revenue declined 6.5 per cent year over year.
Although IBM experienced weakness in its System z mainframe servers, demand for x86-based System x servers improved significantly in the quarter. Hewlett-Packard held the number two spot with 30.5 per cent share for the quarter as revenue increased 0.8 per cent. HP was helped by strength in demand for its x86-based ProLiant servers. Dell maintained third place with 11.5 per cent factory revenue market share. Dell experienced 4.5 per cent revenue growth compared with the previous fourth quarter due to strength in demand from enterprise, public sector, and data centre solutions customers. In fourth place Sun Microsystems experienced a year-over-year revenue decline of 17.3 per cent to 8.0 per cent market share, while Fujitsu, experienced a 7.2 per cent increase in factory revenue to give it 4.6 per cent revenue share.
Mobile phone sales slip in 2009
Worldwide mobile phone sales to end-users totalled 1.211 billion units in 2009, a 0.9 per cent decline from 2008, according to Gartner. In the fourth quarter of 2009, the market registered single-digit growth as mobile phone sales to end-users surpassed 340 million units, an 8.3 per cent increase from the fourth quarter of 2008.
"The mobile devices market finished on a very positive note, driven by growth in smartphones and low-end devices," said Carolina Milanesi, research director at Gartner.
"Smartphone sales to end-users continued their strong growth in the fourth quarter of 2009, totalling 53.8 million units, up 41.1 per cent from the same period in 2008. In 2009, smartphone sales reached 172.4 million units, a 23.8 per cent increase from 2008. In 2009, smartphone-focused vendors like Apple and Research in Motion (RIM) successfully captured market share from other larger device producers, controlling 14.4 and 19.9 per cent of the worldwide smartphone market, respectively".
Throughout 2009, intense price competition put pressure on average selling prices (ASPs). The major handset producers had to respond more aggressively in markets such as China and India to compete with white-box producers, while in mature markets they competed hard with each other for market share. Gartner expects the better economic environment and the changing mix of sales to stabilise ASPs in 2010.
Mobile broadband maturing rapidly
Although respondents to a recent survey still believe mobile broadband is good news, they are now more realistic about its benefits and challenges when compared to the more overt enthusiasm found in a similar survey conducted early last year. "Margin expectations are more reasonable, the threat to fixed broadband is now viewed as real, while the network is seen as critical for differentiation," explained Nathan Burley, an analyst with Ovum, which conducted the survey.
Mobile broadband traffic has been growing rapidly, partly due to the business models adopted and especially unlimited/flat-rate models. Approximately two-thirds of respondents believed both access and backhaul capacity are now, or will be in the next 12 months, constraints to services.
Excluding installing more capacity to ease constraints, respondents thought operators should look at off-loading traffic, especially through WiFi and, to a lesser degree, femtocells. "This reflects our belief that there is no silver bullet to dealing with traffic growth and numerous solutions will need to be utilised", said Burley.
Additionally, last year 65 per cent expected mobile broadband to be the same or higher-margin business than mobile voice. This year this is down to 55 per cent of respondents, still an optimistic view of the service's future, but less so than before.
The survey also revealed that 76 per cent of respondents saw some, significant, or large fixed-to-mobile broadband substitution occurring, Burley added. "We agree mobile broadband revenue streams in Asia/Pacific will not entirely be generated from a new product category. Rather the service will steal revenue from the fixed broadband market, as more mobile broadband operators compete directly for fixed broadband users. For many consumers, especially in emerging markets, fixed broadband access will be irrelevant."
In a notable change from last year, price is no longer considered the most important differentiator in the Asia/Pacific mobile broadband market. It has been replaced by coverage and quality of service. It has become evident within the industry that cheap mobile broadband pricing alone will not secure customers acquisition, loyalty or differentiation.
"This is another sign of a maturing industry, and a signal of the need for ongoing network investment to meet growing traffic demands. Coverage and quality of service have been very important differentiators in the mobile voice market. They will also be, if not more so, for mobile data," Burley concluded.
Enterprise security a leading issue
Forty-two per cent of organisations globally and 43 per cent in Australia and New Zealand (A/NZ) rate security their top issue. This isn't a surprise, according to Symantec, which conducted the survey, because 75 per cent of organisations globally and 89 per cent in A/NZ experienced cyber attacks in the past 12 months. These attacks cost enterprise businesses an average of $US2 million per year. More troubling, however, was that organisations reported that enterprise security was becoming more difficult due to understaffing, new IT initiatives that intensify security issues, and IT compliance issues. The study was based on surveys of 2100 enterprise CIOs, CISOs, and IT managers from 27 countries in January 2010.
Security is of great concern to enterprises everywhere. Forty-two per cent of enterprises globally and 43 per cent in A/NZ ranked cyber risk as their top concern, more than natural disasters, terrorism, and traditional crime combined. Reflecting that perception, IT is intently focused on enterprise security.
On average, IT assigned 120 staffers to security and IT compliance. Enterprises rated "better manage business risk of IT" as a top goal for 2010, and 84 per cent globally (91 per cent in A/NZ) rated it absolutely/somewhat important.
Nearly all the enterprises surveyed (94 per cent globally and 100 per cent in A/NZ) forecast changes to security in 2010, with almost half (48 per cent globally and 42 per cent in A/NZ) expecting major changes.
Enterprises are experiencing frequent attacks. In the past 12 months, 75 per cent of enterprises globally and 89 per cent in A/NZ experienced cyber attacks, and 36 per cent globally and 34 per cent in A/NZ rated the attacks somewhat/highly effective. Worse, 29 per cent of enterprises globally and 34 per cent in A/NZ reported attacks have increased in the last 12 months.
Every enterprise experienced cyber losses in 2009. The top three reported losses globally were theft of intellectual property, theft of customer credit card information or other financial information, and theft of customer personally identifiable information. In A/NZ, the top three reported losses were theft of corporate data at 53 per cent; theft of customer personally identifiable information at 53 per cent and identity theft at 37 per cent.
These losses translated to monetary costs 92 per cent of the time. The top three costs were productivity, revenue, and loss of customer trust globally and loss of data (49 per cent); damage to brand (37 per cent) and lost revenue (31 per cent) in A/NZ. Enterprises reported spending an average of $US2 million annually to combat cyber attacks.
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