A report issued Tuesday by market researcher IDC showed that server sales in the fourth quarter of 2008 fell a whopping 12% compared with the corresponding quarter in 2007. The primary reason for the dramatic decline was the severe global recession and a "faster-than-expected" drop-off of sales in Western Europe and Asia. And things aren't looking much better for this quarter either.
"Things really fell off in January and February," IDC group VP Matt Eastwood said. "We're setting ourselves up for a pretty poor first quarter."
The report showed that Hewlett-Packard's fourth-quarter revenue fell 10.1% to $3.9 billion, although its market share improved slightly. Sun's revenue fell 14% during the quarter.
Another advantage of the deal that officials from both companies can agree on: It creates a single point of contact and accountability for the companies' respective products. They hope this will serve to lessen some of the typical frustrations users face when trying to get questions answered involving technical problems. They also believe it will reduce operational costs.
As part of the deal, both companies also have agreed to work in concert to align Solaris 10 with HP's Insight software on ProLiant servers, which they hope will result in making the servers more manageable.
Some analysts believe the deal was primarily driven however, to keep the companies’ users happy, particularly HP's.
"If you ask Sun how their Solaris business is doing, they would tell you they have had more success putting Solaris on ProLiant blades than Sun x86 servers. Customers can put Solaris on for free or pay for it, so if HP can get those customers at the time of a sale on a subscription, it is better for both companies," said Al Gillen, program VP of system software with IDC.
Gillen doesn’t believe that HP's decision to bundle Solaris or OpenSolaris will bring tension to its existing relationships with Microsoft or Red Hat, where it already bundles Windows and Linux on ProLiant systems.
"I don't see this as a distracting element for the relationship HP has with Microsoft or Red Hat. HP is just offering variety and choice, making its servers as attractive as they can to customers," Gillen said.
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