Server Manufacturers See Increased Demand

As 2010 drew to a close, one thing was certain – companies were once again investing in server technology. While technology spending, like most business products, took a hit in the recent years as businesses scaled back growth and capital improvements, this area has quickly rebounded. Companies are quick to realize that without updated and well-maintained server technology, costly slowdowns and mistakes can slow their burgeoning recovery.

As the big server makers, such as Hewlett Packard, Dell, IBM, Oracle and Fujitsu, closed out their fourth quarter and fiscal year 2010, the growth in server sales was evident. After an abrupt fall-off in sales in 2009 as global markets suffered, 2010 server revenue grew 10% over the previous year. Fujitsu won out over the other top five global server vendors in the Q4 2010, showing the most growth in worldwide server shipments as reported by the Gartner market research firm. Fujitsu improved their Q4 sales in 2010 by 12.6% compared to same period sales in 2009. Dell recently released robust earnings as well, reporting a server revenue increase of 16%. With one of its strongest fourth quarters in years, including increases in server revenue and margins, IBM’s chief financial officer, Mark Loughbridge stated, “We see customers starting to spend more in their base business as we exit the recession.”

For 2011, business expenditures on adding and improving server technology are expected to continue to grow. Analysts at International Data Corporation (IDC), a technology research company, predict that 2011 server sales will grow by 5.1 percent over 2010’s gains. Globally, they expect sales of about 8.2 million servers globally, resulting in approximately $ 53 billion in revenue, an improvement of about $ 7 billion over last year. IDC partly attributes the recovering economy as a driving force in increased server sales. They also believe, however, that newer technologies such as mobile business computing are being adopted at such a rapid pace that companies need to improve their server capabilities just to cope with the massive amount of data being produced. Additionally, Richard Kugele of Needham & Co investment firm believes, “the corporate PC refresh cycle is still in the early innings, and that IT spending will transfer into server deployments,” with an IT growth of approximately 5-7%.

Thanks to a combination of improving financials and a need to manage explosive data growth, organizations are increasingly improving their information systems with updated and efficient server technology. As a result, more companies and their customers are looking forward to a better way of doing business in 2011.

About the Author: Steve Oono is the VP of Sales for Mojo Systems. They are the leading industry provider of Sun servers, HP servers, IBM, Oracle, and Fujitsu hardware and servers. For more information, please visit http://www.gotomojo.com.

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