Vendors told they must offer better products if they wish to support increased ASPs

Server vendors have been warned that they need to increase the functionality of their products or an increase in prices will soon begin to hurt sales. The warning comes on the back of IDC's second-quarter figures, which showed that EMEA server shipments fell 4.5 per cent year on year to 525,059.

 

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The decline in revenues was not quite so severe, with the market's worth dropping 2.5 per cent annually in Q2 to $3.1bn (€2.78bn). This disparity was partly the result of an increase in average selling prices (ASPs) at the top end of the x86 market, as vendors worked to offset the damage caused by the dollar's strength against the euro. The effect of the European currency's sharp drop in the past year is demonstrated by the fact that the market still declined in dollar terms, despite euro revenues increasing by 21 per cent year on year.

 

The hefty rise in ASPs that vendors have introduced to compensate for this can be supported only if they are willing to start providing end users with commensurately better products, the analyst claims. "IDC predicts that these ASP increases could start to affect value propositions and demand towards the end of 2015 if vendors cannot justify the increased prices with additional functionality and performance," said IDC. Western Europe continued to be the EMEA server market's mainstay in Q2, with revenues in the region of $2.5bn coming in flat in dollar terms in comparison with the prior year.

 

The central and eastern Europe region was hurt by instability in Russia, and saw revenues decline 22.8 per cent annually to $272m. Sales across the Middle East and Africa rose 1.9 per cent to $382.44m.

 

    • HP maintained a dominant lead at the top of vendor leaderboard, holding 35 per cent of the EMEA market by revenue in the second quarter. Following IBM's sale of its x86 business to Lenovo,

 

    • Dell now sits in second place and has narrowed the amount by which it lags HP by 1.5 points in the past 12 months. The Texan firm now has a 17 per cent market share, and increased Q2 sales by 4.5 per cent year on year to $528m.

 

    • IBM now sits in third with a 14.1 per cent slice of the EMEA server space, having shed more than a third of its revenues and market share in the past 12 months.

 

    • Lenovo, conversely, has seen its business increase more than thirtyfold with the IBM System x buyout. The Chinese vendor accounted for 7.4 per cent of EMEA server revenues in 2015's second quarter, up from just 0.2 per cent in the corresponding period last year.

 

  • Cisco – which grew sales 7.6 per cent to $164m and holds a 5.3 per cent share of the market – completed the top five.

 

http://www.channelnomics.eu/channelnomics-eu/news/2425194/server-vendors-must-increase-functionality-or-price-rises-will-hurt-market-idc