NAND flash prices are sliding on low demand

Computerworld - The manufacturer's price for NAND flash chips slid 5% to 10% in the second half of August, and they're expected to continue downward over the next few months.

The average price for NAND flash is now $4.90 for a 64Gbit chip and $2.90 for a 32Gbit chip, according to TrendForce.

According to DRAMeXchange, a research division of TrendForce, NAND flash contract prices from manufacturers are weaker due to lower demand by laptop, tablet and even smartphone makers.

Mobile system makers who over the past year increased inventory of NAND flash for their systems are now backing off on new flash purchases, according to DRAMeXchange.

Currently, DRAMeXchange is projecting that fourth quarter flash capacity will grow by approximately 10% even as NAND Flash manufacturers continue to restrict supplies as a way to control prices. That's because many device manufacturers have already stockpiled NAND flash in preparation for higher sales, and as new flash plants come on line, supply will surge as demand will falls.

Even with new smartphones and tablets expected to launch this month September -- Apple has an event scheduled for next week at which it's expected to unveil new iPhones -- embedded flash capacity growth is still expected to be slack.

"This is mostly due to the conservative buyer attitude and the rise of low-cost smartphones and tablets," DRAMeXchange said in its research summary. "TrendForce believes it is highly likely that the September prices will continue to drop."

Lucas Mearian covers storage, disaster recovery and business continuity, financial services infrastructure and health care IT for Computerworld. Follow Lucas on Twitter at  @lucasmearian or subscribe to Lucas's RSS feed . His e-mail address is lmearian@computerworld.com.

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Server revenue continued slide in Q2 on weak demand, says IDC

The server business continued to slide in the second quarter with worldwide revenue and unit sales down, IDC said Tuesday.

Revenue was down 6.2 per cent to $11.9 billion in the second consecutive quarter of year-over-year decline, as demand for servers continued to soften in most geographic regions, the research firm said. Unit shipments were also down 1.2 percent to 2 million, after also falling in the previous two quarters.

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The highest fall in revenue was in midrange systems, which dipped by about 22 percent year-over-year, while volume systems had a 2.4 percent revenue decline and revenue from high-end systems dipped 9.5 percent in the quarter ended June.

The slowing demand is a combination of factors including consolidation, virtualization, and migration initiatives by mainstream small and medium businesses and enterprise customers, and dampening demand for new IT projects in difficult economic conditions. Top server vendors tried to offset weak demand for higher-margin Unix and blade servers with lower-margin rack and density optimized servers, IDC said.

IBM held the number one position in the server market with a 27.9 percent share of revenue, but its share was down from over 29 percent last year. The company's server revenue fell in the quarter by 10 percent year-over-year because of low demand for System x and Power Systems. IBM's System z mainframe running z/OS, however, had a third consecutive quarter of growth, with revenue up by 9.9 percent year-over-year to $1.2 billion. The mainframe accounted for 9.8 percent of server revenue in the quarter.

Hewlett-Packard held the number two position with a smaller market share of close to 26 percent, after a year-on-year decline in revenue of 17.5 percent as a result of poor demand for x86-based ProLiant servers and continued decline in demand for HP Integrity servers.

Dell fared better, growing its server market share to 18.8 percent, its highest ever in any quarter, from 16 percent last year, to retain the third spot. Dell's server revenue grew 10.3 percent in the quarter. Rival Oracle held the fourth position with 6 percent market share followed by Cisco Systems at number five with 4.5 percent share after a close to 43 percent growth in revenue. Cisco had a statistical tie with Fujitsu in the last quarter.

Revenue from density optimized servers, used in large hyperscale datacenters, surged 26.6 percent year-on-year in the quarter to $735 million, while units shipped increased 13.8 percent to close to 200,000 servers. Dell continues to lead in this market with a whopping 60.5 percent share.

In contrast, revenue from blade servers was down 6.2 percent year-on-year to $2.0 billion. Blades accounted for close to 17 percent of total server revenue in the quarter. HP held the top position in this market with 44.8 percent share of revenue.

Demand for x86 servers was weak in the quarter, with revenue down by 1.3 percent year-over-year to $8.7 billion as shipments were relatively flat at 1.9 million servers, according to IDC.

Linux servers benefited from cloud infrastructure deployments and now account for about 23 percent of all server revenue, up by 1.8 percentage points from the same quarter a year ago. Windows server sales were, however, down 5.1 percent, with quarterly server hardware revenue at $5.8 billion, representing 49.3 percent of overall quarterly server revenue, IDC said. Unix server revenue declined 21 percent to its lowest quarterly revenue of $1.8 billion, accounting for about 15 percent of server revenue for the quarter.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's email address is john_ribeiro@idg.com.

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