European demand for servers is slowing, with the spend in the mature Western European market trending towards zero.
Research by market watcher IDC shows that server revenue in the EMEA region grew by just 2.4% to $4.0 billion in the second quarter of 2005 compared to the same period a year ago. That rate represents the sector's slowest pace in over two years.
The biggest downward pull on the numbers came from Europe, where revenues declined by 2% compared to a year earlier to just over €3.1 billion. While previous quarters have seen high double-digit growth, shipments in this latest period grew only 9.6% to 522,000 units.
However, across EMEA there is a wide disparity in rates of growth between the mature Western European market and the fast-expanding Central and Eastern Europe (CEE) and Middle East and Africa (MEA) areas. Compared to the second quarter of 2004, shipments in CEE increased by 20.5% and revenue grew by 12%. MEA revenue and unit growth rates hit 11.7% and 10.5% respectively. Those areas easily outpace Western Europe where sales grew by 0.8% and unit shipments rose 8.2%.
IDC analyst Stefania Lorenz says the rapid growth in CEE and MEA is due to "major restructuring reforms, in the public and private sectors alike, spurred by the flow of massive EU funds and the privatisation and deregulation in the telecommunication, banking and energy sectors." A general simplification of IT infrastructures in EMEA was seen as a further driver for the market.