Good news trickled in this week for the hardware sector, plagued by a slump in the traditional PC market, as Gartner reported that server sales rose during the first quarter and Lenovo proved that there is demand for PCs in emerging markets.
Worldwide server shipments in the first quarter of 2011 increased 8.5 percent year on year, while revenue increased 17.3 percent, according to a Gartner report issued Thursday. Total server revenue for the period was US$12.6 billion and worldwide shipments were 2.3 million, Gartner said.
"The first quarter continued a quarterly trend of year-on-year growth in both shipments and vendor revenue," said Jeffrey Hewitt, research vice president at Gartner, in the report. "All regions showed growth in both shipments and vendor revenue, with the exception of Japan." Bucking a trend that has afflicted the PC market, x86-based servers experienced an increase in average selling prices that pushed revenue higher than shipments, Hewitt noted.
There was good news for servers all around, in fact. RISC/Itanium Unix reversed a recent declining trend and increased 5.2 percent in shipments and 20.7 percent in vendor revenue year over year. Gartner also noted that the "other" CPU category, essentially mainframes, marked an increase in vendor revenue of 19.6 percent.
The top five server makers worldwide showed sales increases except for Fujitsu. U.S. vendors claimed four of the five top spots. In order, they are Hewlett-Packard, IBM, Dell, Fujitsu and Oracle.
Meanwhile, Lenovo showed that there is money to be made in emerging markets. Lenovo said Thursday that for the quarter ending in March, profit more than tripled, hitting US$42 million, as sales jumped 13 percent to $4.88 billion.
The company's effort to protect its China sales stronghold while expanding into developing markets like Latin America, Eastern Europe and Africa has been paying off, according to Lenovo CEO Yang Yuanqing, speaking in a webcast for analysts and media. Lenovo underlined that PC shipments for the quarter increased 16 percent year over year, compared to an overall global industry decline.
Meanwhile, a report from IHS iSuppli (formerly iSuppli) underscored a variety of recent reports about the soft first quarter for the PC market. Worldwide PC shipments totaled 81.3 million units in the first quarter of 2011, a 0.3 percent year-over-year decline, according to the IHS iSuppli report.
Of the world's top five PC makers, only Lenovo and Toshiba, the number-four and -five manufacturers, respectively, experienced shipment growth, iSuppli said. The top three PC makers, Hewlett-Packard, Dell and Acer, experienced declines of 8 percent to nearly 15 percent.
The decline in PC shipments comes after a record-breaking quarter for PC shipments at the end of 2010, when 93 million PCs were shipped globally. Industry insiders have debated the reason for the sequential decline of PC shipments in the first quarter of 2011.
One big reason for the relative jump in shipments last year was that as the recession ended, many consumers and businesses, which had put off hardware purchases as they tightened their belts, bought new PCs to replace aging machines. Windows 7, released in 2009 as the recession was ending, was an added attraction. Now, however, innovation appears to be taking place largely in the tablet arena. Industry analysts are divided about the impact tablets have had on PC sales.
"IHS believes that the jury is still out on exactly how much tablets are cannibalizing PC sales," said Matthew Wilkins, principal analyst for compute platforms research at IHS, in the company report. "However, the rising number of tablet models on the market, along with certain high-profile product launches during the first quarter, caused confusion among consumers as to exactly how to view the tablet platform relative to the PC platform. This contributed to the PC sales decline in the first quarter."