India''s 2Q ''04 server revenue rises 31 per cent: Gartner study

Mumbai: The Indian server market revenue grew 31 per cent over last year. Increased business from small and medium businesses contributed to overall revenue, apart from the consistent run-rate business, according to Gartner, Inc. (NYSE: IT and ITB), provider of research and analysis on the global information technology industry.

The Hong Kong market grew by 59 per cent over last year. Part of the high growth rate was also because of weak business confidence last year in Hong Kong due to the impact of SARS. The Asia / Pacific region (excluding Japan) revenue totalled US$1.37 billion in the second quarter of 2004, a 12.4 per cent increase from the same period last year.

Matthew Boon, Gartner's vice president for hardware and systems in Asia Pacific, says, "The second quarter of 2004 followed on the growth trajectory enjoyed in the opening first quarter in Asia Pacific." He further noted that, "There were a number of factors which contributed to this annual growth record such as the intense competition and price sensitivity in the region, as multinationals take on local vendors in markets like China. This has allowed users to leverage such unique conditions and increase purchases."

China continued to be the No. 1 country for server revenue in Asia/Pacific followed by Korea and Australia (Table 1). China grabbed 35 per cent chunk of the market with annual growth exceeding 23 per cent. Shipment of entry level servers increased due to heavy competition and the resultant decline in prices. Vendors witnessed positive demand from the finance, government and education verticals.

Table1
Asia/Pacific server revenue estimate by country in Q2 2004 (US Dollars)

Country	2003 Q2 Revenue	2004 Q2 Revenue	YoY Growth %
Australia	202,885,466	203,399,583	0.3
China	394,684,836	488,272,548	23.7
Hong Kong	39,365,985	62,752,065	59.4
India	74,913,696	98,363,876	31.3
Indonesia	22,559,118	25,500,488	13.0
Korea	252,272,316	224,723,993	-10.9
Malaysia	22,434,647	35,782,611	59.5
New Zealand	29,186,574	26,635,651	-8.7
Philippines	9,766,045	15,268,558	56.3
Rest of Asia/Pacific	9,447,298	12,840,818	35.9
Singapore	53,459,972	59,922,793	12.1
Taiwan	75,233,733	83,086,804	10.4
Thailand	30,446,082	32,436,509	6.5
Vietnam	6,345,344	5,083,965	-19.9
Asia/Pacific	1,223,001,111	1,374,070,261	12.4

Source: Gartner Dataquest (August 2004)

South Korea continued its dry run with revenues declining by 11 per cent over last year. Ongoing economic depression and increase in prices of raw materials and oil has impacted overall business confidence. The RISC server segment was badly affected due to this sentiment.

The second quarter of 2004 proved to be a strong one for the Singapore server market. Revenue grew 12 per cent year-on-year and 4 per cent quarter-on-quarter. The business outlook in the second half of 2004 is positive as most economic indicators point to continuing for growth. Sectors such as finance, manufacturing and small and medium businesses are increasing server spending in order to seize growth opportunities.

Server spending in Australia remained healthy despite the strong appreciation of the Australian dollar against the US dollar. Year-on-year growth is 0.3 per cent, not discounting exchange rate fluctuations.

A look at how vendors are faring in this dynamic region as they jockey for positions (Table 2). Gartner's Boon commented, "IBM continued its very strong position in this region with continued increases in its X-series and significant growth in revenues of the Z-series in many markets, including China with revenue growth upwards of 40 per cent."

"While HP managed to hold its market share in the region, given the growth across the region as a whole this must be a disappointment for them. While HP in AP has performed generally better than worldwide within its Enterprise segment, it still did not manage to grow," said Boon.

Boon went on to say that, "Dell continues to grow with strong results in many markets, including China and Australia. China particularly for Dell remains a strong focus with the local vendors such as Legend and LangChao feeling the pain of continued concerted efforts by Dell to increase market share."

Commenting on Sun, Boon says, "They faced further decline in revenue during the second quarter of 2004 in Asia Pacific when compared to Q2-03, while managing to improve in the volume space. Tough conditions in the traditional mid-range and high end continue to cause revenue issues for Sun in Asia Pacific"

From a vendor perspective, IBM garnered 37 per cent market share to top the list followed by Hewlett-Packard with 31 percent market share. Both vendors recorded double digit annual growth of 16 per cent and 12 per cent respectively.

Sun Microsystems, on the other hand, witnessed a revenue decline of 4 per cent. It fared well in China and India while its revenue declined in Australia, Korea and Singapore.

Table2
Asia/Pacific Server Market Share Estimates for Q2 2004 based on Revenue (All Servers)

Vendor	2003 Q2 Market share %	2004 Q2 Market share %
IBM	36.0	37.2
Hewlett-Packard	30.6	30.7
Sun Microsystems	16.3	14.0
Dell Inc.	4.9	5.9
Fujitsu/Fujitsu Siemens	1.2	1.6
Other Vendors	11.0	10.6
Asia/Pacific	100.0	100.0

Source: Gartner Dataquest (August 2004)

Detailed statistics are available to clients of Gartner's Servers Quarterly Statistics program. These programs offer a comprehensive, global market information service that analyzes and documents the server and workstation industries. This report, when available, can be purchased on the Web at www.gartner.com.