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Sun 5 Jun 2005 04:00 AM

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Middle East leads way

The Middle East and Africa (MEA) region was the strongest sub-region as Europe Middle East and Africa (EMEA) server units grew 13% in Q105, according to IDC.

The Middle East and Africa (MEA) region was the strongest sub-region as Europe Middle East and Africa (EMEA) server units grew 13% in Q105, according to IDC.

According to IDC's EMEA Quarterly Server Tracker, factory revenue in the EMEA server systems market grew at 3.7% to US$4 billion in the first quarter of 2005. While the market continued to grow in dollar terms, in euros, the market declined at 1.3% year over year to just over €3 billion. Unit shipments grew at 13% to 520,000. The strong growth results of the previous seven quarters are beginning to catch up and have a moderating effect on current growth.

The Middle East and Africa (MEA) led revenue and unit growth at 15.4% and 27.6%, respectively. This increased MEA revenue share to 7.2%. Central Eastern Europe (CEE) also recorded year-on-year factory revenue growth above the EMEA average.

“In the large total addressable market, the variety of strong verticals such as oil, gas, mining, and the public sector see continued investment flowing into both CEE and MEA,” says Stefania Lorenz, program manager, IDC CEMA Systems.

Western Europe grew slowest among the EMEA sub-regions.

Recently, there have been some marked differences in the way vendors are selling.

“We see vendors moving away from selling processor types and operating systems, pushing away from the discussion around technology to management, process integration, and so forth,” says Thomas Meyer, director, IDC European Enterprise Server Solutions.

This is driven by the change in market dynamics but there are also other motivations. The EMEA server market continues to contract in euros and most vendors have communicated margins improvement aims. At the moment, vendors are able to offer favorable discounts in euros, which are compensated by dollar reporting. The drift towards modular, standard, and in effect cheaper form factors is certain to continue.

“However, vendor management has recognised this issue and is prioritising positioning for better margins by changing internal metrics, supplier dealing, and channel relationships, for example,” says Nathaniel Martinez, program manager, IDC European Enterprise Server Solutions.

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