European server and storage sales through the channel plummet


Growing business caution has hit European server and storage sales, according to analysts, leaving the industry in negative growth territory.

Analyst house Context has revised down its overall 2023 forecast for sales growth through the European IT channel – from 1.6 percent growth for the year to -3.3 percent.

“The cumulative impact of the war in Ukraine, the high cost of living, the cost of capital and high interest rates has led to sinking business confidence, and not just in the European Union, but also in China and the US,” said Context.

The enterprise server market experienced a year-on-year decline in revenue growth in the first quarter of 3.8 percent, said Context, and an even bigger drop in the second quarter of -11.7 percent.

Performance was worst in the UK (-38 percent) and Italy (-29 percent), which are, of course, two of the bigger European markets. Although sales are said to have “held up” in Spain, France and Germany.

Volume server sales growth fared little better, however, declining -21 percent across Europe. This was driven by a 26 percent year-on-year drop in the two-socket segment.

In the storage space, revenue growth fell significantly from 17.3 percent in the first quarter to -9.5 percent in the second quarter, thanks largely to the poor performance of the storage array segment (-13 percent), and especially hybrid and flash arrays.

The hyperconverged infrastructure (HCI) segment recorded a slight revenue increase in the second quarter of 2.9 percent, thanks to a strong performance in the UK (up 15 percent), and Italy – up 53 percent.

Other factors potentially influencing sales going forward are component pricing and availability, especially in artificial intelligence-ready components, the analyst said.

Comparatives from last year will also drag down server and storage growth figures for the rest of 2023. “Those double-digit server sales in 2022 are not going to be replicated in 2023, as they were driven mainly by the clearing of backlogs last year,” said Context.

So will there be a recovery in the server and storage market any time soon? The analyst says inflation is slowly receding across the European Union and opportunities remain for the IT channel thanks to enterprise digital transformation efforts, public sector investments, product refreshes, and the drive for sustainability.

Context is “hopeful” for a return to growth next year.