Asian demand for servers drops in first quarter

Agence France-Presse, Singapore

Sales of servers in the Asia-Pacific outside of Japan fell in the first quarter to March from a year ago as the fragile economic environment continued, a report released Monday said.

"The bleak economic environment continued to affect server spending in the region," International Data Corp. (IDC) said in the report.

In the March quarter, sales of servers totaled US$1.3 billion, down seven percent from $1.4 billion a year ago, the report said.

In terms of units sold, the figures stood at 125,621, 4.5 percent lower from 131,547 servers sold in the first quarter of 2001.

On a positive note however, the sales decline in the first quarter was slower than the 19 percent year-on-year fall posted in the third quarter and 14 percent drop in the fourth quarter, IDC said.

"This shift indicates the initial stages of an impending market recovery, which IDC expects to materialize in the second half of this year," IDC's director for computing systems Avneesh Saxena wrote in the report.

Also, eight of the 12 economies covered in the report performed better than the regional average, compared with just five in the previous quarter, IDC said.

Still, IDC warned the anticipated recovery in demand for servers hinged on an improvement in the U.S. economy and other major economies.

"While we are seeing early signs of recovery across the various Asia Pacific markets, the sustenance of this trend depends on the revival of the U.S. and global economies," the report said.

"The corporate demand for servers is crucial to the overall market, and will largely depend on the improvement in exports and domestic consumption."

Of the 12 economies covered in the report, China remained the biggest market with a 31 percent share of the 1.3 billion dollars worth of sales generated in the first quarter.

The remaining 11 markets are South Korea, Australia, Taiwan, Singapore, India, Hong Kong, Malaysia, Thailand, Indonesia, the Philippines and New Zealand.