Clouds overshadow 'shrinking' UK server market

The UK server market is forecast to shrink next year as the corporate refresh nears it end of cycle and more SMEs turn to cloud computing instead of buying hardware.

This is the view of the landscape in 2012 according to the number-crunchers at IDC, which downgraded previous estimates of a 2.1 per cent revenue decline for the year to a steeper drop of 6.1 per cent.

The weak growth forecasts for the Western world from the International Monetary Fund combined with dynamics in the x86 space make for some "pretty depressing market conditions", said Nathaniel Martinez, director at IDC.

"SMBs are moving a lot faster to the cloud than we expected as they don't have access to capital to invest in IT infrastructures so some of the server spend is being displaced," he told El Reg.

The replacement cycle occurring in the enterprise market, especially among financial institutions that opened up their wallets at the end of 2009 following the recession, "is pretty much coming to an end", the analyst added.

Martinez said that mid-sized and large corporate organisations are seeing a good ROI on virtualisation and many who had invested in high-spec systems were adding virtual servers instead of buying physical machines.

"[These factors] are bound to have an impact on server hardware revenues," he said. ®