Server Shipments Soar as Central and Eastern European Market Shifts to Volume Machines

IDC: Shipments of enterprise servers shot up by 27.3% to nearly 275,000 units last year in Central and Eastern Europe (CEE). Due to falling prices and the migration to volume servers, revenue from these shipments rose by a more modest but still substantial 12.7% to nearly $1.6 billion. The region's server markets continue to grow due to government IT spending initiatives, EU funding for new member and candidate countries, and positive economic indicators that are improving business confidence and boosting IT consumption by SMEs across the region.

In terms of shipment volume, every CEE country market expanded last year, most of them at rates that make the Western European server markets look like they are standing still,. However lower prices and the move to volume servers has resulted in dramatic differences in the rate of revenue growth. While revenue expanded by an incredible 71% in Bulgaria and by more than 32% in Russia, the Czech, Hungarian, and Croatian markets actually contracted in value due to the shift to less expensive machines.

In terms of size, the Russian arket was again the region's largest country market, accounting for more than 42% of server shipments in 2005. Fueled by larger government projects, this market should continue its rapid growth all this year and into the next. By contrast, private sector projects among large and mid-sized businesses are driving the Polish market, which was the region's second largest in 2005 with more than 16% of total shipment volume. The Czech market ranked third in shipments, Hungary was fourth, and Ukraine was fifth.

HP was the hands down leader in the CEE server market in 2005, ranking first in shipments in every country market. IBM ranked second in the region, grabbing second position in every country market except Ukraine. Dell was third overall, taking third in every country market except Ukraine and Romania. Together, these top three vendors were responsible for 58.8% of shipment volume and 58.2% of revenue. In terms of overall revenue, HP ranked first, IBM second, and Sun Microsystems third.

The shift to less expensive servers will continue over the next few years. servers priced at less than $3,000 accounted for 44.6% of unit shipments in 2003. Just two years later, this number has jumped to more than 50% (although it should be noted that all but one price band increased in size). By 2010, this number will approach 53%. Nevertheless, while high-end servers (those priced at >$500,000) represented less than 0.1% of shipments, they accounted for nearly 16% of total revenue.

The future is bright for the region's server markets,. The various factors pushing things forward will continue for at least the next couple of years, although the growth will not be as dramatic. Server shipments in CEE will rise by just under 17% this year and by almost 13% in 2007. Russia, Ukraine, and Hungary are expected to be the fastest growing markets this year, with the Ukrainian market soaring by over 38%.

Central and Eastern Europe Enterprise Systems and Server 2006–2010 Forecast and 2005 Vendor Shares Publ 20060719