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Server market recovering but shortages an ongoing issue

Issues with shortages have been a feature of the server market in Q1 and have been discussed in the latest trading review from Context

The server market is showing some signs of recovery after a tough last 12 months as SSD and RAM sales improved but inventory issues remain a feature that the channel and customers are having to deal with.

According to figures from market watchers Context, which gets numbers directly from distributors, server computing products sold to enterprise customers in February improved year on year by 12.4%.

Last year only the SSD category was enjoying growth, but this time around RAM saw the strongest sales, driven by a move towards higher capacity dual in-line memory modules (DIMMs). Supply issues in the channel also helped drive up ASPs.

“Server systems, which saw a double digit decline in 2017, showed signs of recovery and dropped by only -4.6% year-on-year”, said Mathias Knoefel, senior manager, corporate benchmarking and enterprise analyst at Context.

“For the first time in over a year, there was growth in the category, mainly as a result of the release of AMD EPYC processors into the distribution channel. Revenues from HDDs continued to decline as they continue to be replaced by SSDs,” he added.

The UK was one of the stronger markets across Western Europe, producing a 17.8% growth for server computing revenues in February.

France was weaker with a 32.4% drop with Italy (down 24.7%) and the Netherlands (a 10.4% decline) also suffering decreased revenues.

The Context figures follow on from an indication from Gartner last month that its analysis of the state of servers in the EMEA market
was suffering because of the inventory problems.

The view from the analyst house was that some buyers were holding back on hardware purchases because of the issues.

“The main driver for the revenue growth remains the increasing cost of certain components due to supply shortages, with vendors passing that cost increase on to users,” said Gartner research director Adrian O'Connell.

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