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Asian server sales down 18 percent

China's server sales are the only bright spot in the region where the economy has dragged server sales down from $1.6 billion to $1.3 billion.

By Nawaz Marican

SINGAPORE--Server sales in the Asia-Pacific region dropped by 18 percent in revenue during the third quarter of 2001, compared with the same period in 2000, according to a report from researcher IDC.

"The market stood at $1.3 billion compared to the dot com-enabled $1.6 billion in the third quarter of 2000," IDC analyst Avneesh Saxena said. "The decline was mainly the result of sluggish economies that have affected server demand across the region."

One bright spot was China, which posted 20 percent year-over-year growth in server sales.

"The rapid expansion of the telecom sector and infrastructure investments by the government largely contributed to the growth in" China, Saxena said.

The only other market in the region that registered growth was Thailand, which was also enhanced by major deals in the government sector.

Saxena linked the current instability in the server marker to the Sept. 11 terrorist attacks in the United States. "Growing market uncertainty is causing the postponement of most major projects that were in the pipeline before the tragic events of Sept. 11," he said. "Only the most crucial upgrade and expansion investments are taking place today."

He predicted that "the shrinking demand will cause further pressure" on server makers, leading to more price cuts.

The IDC report also included lowered growth expectations for the Asian server market. The compound annual growth rate between 2000 and 2005 is now predicted at 8.6 percent, instead of the previous 10 percent.

CNETAsia's Nawaz Marican reported from Singapore.