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There was more bad news for the server market today, after Gartner added to IDC’s gloomy analysis by announcing that worldwide server shipments dropped 28 per cent year on year in the past quarter.

Gartner’s latest figures show worldwide server revenues falling 29.4 per cent year on year in the second quarter of 2009. EMEA was the worst hit region with a 31.9 per cent decline in shipments and a 35.8 per cent drop in vendor revenues.

IBM continued to lead the worldwide server market based on revenue, posting just over $3bn (£1.83bn) and cornering 32.5 per cent of the market. HP was second with 29.2 per cent, despite a year-on-year decline of 30 per cent, while Dell took the third spot, beating Sun Microsystems by a few percentage points.

“The server market remains constrained on a worldwide level,” said Jeffrey Hewitt, a research vice president at Gartner. “Server sales have felt the impact of reduced budgets since the last half of 2008, and the second quarter of this year remained in the negative.”

Hewitt added that no server segment had managed to buck the recession. X86-based server shipments fell 27.4 per cent over the quarter, and RISC/Itanium Unix servers were heavily affected with a fall in shipments of 40.6 per cent.

Gartner warned that growth in the overall server market is unlikely before next year.

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Fibre-optic cable networks are not as secure as believed – with new technology making it easy for hackers to steal data from them, according to an IDC report.

IDC research analyst Romain Fouchereau said that the reputation of a fibre-optic cable network as more secure than copper cables wasn’t justified, and that new and inexpensive technologies have now made data theft easily possible for hackers without detection.

Organisations that carry sensitive information across fibre-optic cables are potentially vulnerable from criminal threats, as much of the cabling is easily accessible and not well protected. Fouchereau said that hacks on optical networks could be achieved simply by extracting light from ultra-thin fibres.

Once a successful tap has been achieved, software that records, monitors and analyses the data (called packet sniffers), can capture the data.

“Organisations in the financial, insurance, healthcare, and government sectors deliver sensitive information across fibre-optic cables around the world,” Fouchereau said in the report.

“Hence, capturing or eavesdropping on this data serves not only military purposes. Industrial espionage in these sectors is worth billions of dollars.”

The report also includes some past incidents of optical fibre networks being hacked, such as credit card breaches, government eavesdropping, and the criminal monitoring of big pharmaceutical companies in the UK.

Fouchereau said that as it was impossible to monitor the entire optical fibre network, the only solution to prevent it currently available is through encryption – which would render the data useless to hackers.

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IDC Foresees Further Consolidation in the European Services Market

11 Aug 2009

MADRID, August 11, 2009 — According to a recent study published by IDC, the 50 largest service providers in Western Europe represented around 55.5% of the overall services market in 2008, compared with 53.4% in 2007. IDC estimates that the Western European services market grew by 8.5% in current dollars during 2008 (5.3% in constant currency), driven by healthy growth in the IT services market and double-digit growth in the BPO market. The top 50 service vendors grew 9.7%, 1.2 percentage points above the total services market, for a combined revenue of $152.2 billion.

The 2008 rankings painted a largely positive picture of the services sector, with most of the vendors enjoying growth driven by renewed spending on project-based as well as outsourcing services. We expect the next edition of the top 50 ranking to show a less positive picture as a result of the intensification of the downturn.

Market consolidation continued throughout 2008 and will continue in 2009. The HP-EDS merger was the major contributor to the market consolidation trend, although for 2009 some other large reorganizations — the combination of Fujitsu Services and Fujitsu Siemens Computers (FSC) under one brand and the Oracle-Sun merger — will also contribute to reduce the market fragmentation.

The Italian company Gruppo Engineering, together with Steria and Wipro, were the three fastest-growing companies in 2008. Most of the growth among the fastest-growing companies can be attributed to acquisitions in 2008 or in previous years. However, this trend mostly refers to local and regional players in Europe, whereas India-based players stand out for their high organic growth.

The study, Top 50 Western European Service Players in 2008 (IDC #Q03R9, August 2009), provides a competitive analysis of the high end of the Western European IT and business services industry. It presents an overview of the competitive landscape for services companies, examines trends and changes in the marketplace, and helps provide a quantifiable view of European IT and business service providers.

“With a few exceptions, most of the vendors in the top 50 ranking enjoyed growth driven by increased sales, combined with small acquisitions to strengthen their presence in specific geographies or industries, or to gain global sourcing capabilities,” said Laura Converso, research manager, European Services Market and Competitive Insights. “Pure-play offshore vendors continue to quickly penetrate the European services market. TCS is the first so-called offshore provider to reach the top 20 IT services ranking, marking a symbolic breakthrough.”

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Analysts IDC have reported that processor sales rose by over 10 per cent for the second quarter of the year, compared to a drop of over ten per cent in the first quarter.

Sales of Intel’s Atom processor led the sales, with shipments increasing by 34 per cent in the second quarter. This move to the smaller, lower powered processor did much to help the ailing chip market.

However, IDC is arning that this may not be a sign of a return to growth in the chip market; more than system builders are building up inventory in certain segments.

“The percentage of Intel’s revenue earned in Asia/Pacific grew from 51 per cnet in 1Q09 to 55 per cent in 2Q09,” noted Shane Rau, director of Semiconductors: Personal Computing research at IDC.

“This fact, combined with the significant sequential ’snap-back’ rise in Intel’s overall processor shipments—particularly Atom shipments—while AMD’s overall shipments were about flat, indicate that the PC processor market didn’t recover in 2Q09. Instead, the market balanced out due to Intel driving Atom processors into ODMs who manufacture the systems, particularly in China and Taiwan.”

The Atom processor is the core for much of the netbook market, the main growth engine for PC sales so far.

Overall in the second quarter Intel had a market share of 78.9 per cent while AMD captured 20.6 per cent. Via mopped up the rest of sales with a 0.5 per cent market share.

However, much of the sales in the second quarter did not reflect business and consumer demand and were more about manufacturers building stock IDC reported.

“Going forward,” added Rau, “IDC believes that ODMs and OEMs have balanced out their inventories and so we can’t rely on inventory replenishment to drive market improvements.”

“Instead, we can only rely on what actual end demand really is, and that means we have to be cautious not to be over-exuberant that, say, the traditional back-to-school PC buying season will materialize into a bullish second half. It won’t.”

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