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Coronavirus: the Server Market is Recovering from the COVID Crisis

Gurvan Meyer, Business Enterprise Analyst at CONTEXT
Gurvan Meyer, Business Enterprise Analyst at CONTEXT

The market for servers in the European IT distribution channel is on the up, according to the latest data published by CONTEXT, the IT market intelligence company.

Revenues from the server market, which includes server systems and upgrades, have returned to pre-COVID-crisis level in the latest weeks. The picture is, however, more nuanced when looking at country level.

Sales are catching up well in Germany, Italy and Spain and have entered positive growth territory. Indeed, Spain and Italy are positively growing in week 20, which includes week 17 to week 20 revenues as a rolling 4 weeks, with respectively +2.4% and +9% year-on-year revenue growth while Germany is showing +10.6% increase in the same period.

Meanwhile other countries are lagging behind. There are no signs that distributors in France and the UK have seen transactions pick up in the last few weeks with the former declining by -37.9% in week 20 and the latter showing a revenue reduction of -34%. This is not completely unexpected as, traditionally, a smaller proportion of infrastructure business in these markets goes through the distribution channel.

The CONTEXT corporate reseller panel shows strong server sales over the last month in these 2 countries offsetting, to some extent, the negative impression of recovery given by looking at the distribution channel alone. Week 18, which includes week 15 to week 18 revenues, is growing in France by +14.6% and in the UK by +33.6% compared to the same period last year. In those two countries, infrastructure sales tend to go more heavily through tier-one corporate resellers, and those resellers also quite often deal with large and more complex infrastructure projects.

As lockdown eases, larger organisations are back to business whereas smaller companies have been slower to resume operations and this could go some way to explaining the difference in sales pick-up between distribution and tier-one corporate channels”, said Gurvan Meyer, Business Enterprise Analyst at CONTEXT.

Corporate resellers in Germany and Southern Europe tend to buy from distributors (around 80% of corporate reseller business in Spain goes through the distribution channel) which is why COVID recovery is much more visible in the distribution-channel data for these countries.

If, therefore, we take a multichannel perspective, we can say with confidence that the server market in Europe is in a post-COVID phase. Distributors in France and the UK still have some catching up to do but this should happen in the next few weeks as lockdown measures are eased further and the market continues to see the positive impact of projects put on hold being resumed. However, since industries such as retail, hospitality and tourism will be working at only half capacity for the next few months, we should not expect a boom in infrastructure sales any time soon”, Gurvan added.

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