CCID Consulting’s data show that in the first 3 quarters of 2007, China's x86 server market slowed down. Sales volume reached 423,000 sets, generating sales revenue of 7.95 billion Yuan, up by 16.1% and 12.6%, respectively. The main driving forces for market growth came from the fast-growing telecom and value-added telecom services, the accelerating IT applications in the transportation sector, the warm-up of the SMB market and emerging new applications such as online banking and securities trading, new socialist countryside building and city emergency system building. In 2007, competitions in Tier-3 and -4 markets intensified. Foreign firms’ inroad into the low-end market and implementation of regional channel strategies meant that the price and channel advantages upon which domestic firms relied no longer existed. Multi-core and virtualization technologies became new growth points and were the directions and opportunities which firms must grasp. Operational efficiency and reliability will be the major challenges that firms need to face.

Fig. 1 Changes in Size of China's x86 Server Market in 2007



Source: CCID Consulting, November 2007

Looking forward to the Future, CCID Consulting forecasts that:
Product demand will migrate towards the middle- and high-end. In 2008, the server market will gradually slow down. Sales volume and sales revenue are expected to grow by 16.1% and 11.8%, respectively. And, the product demand will migrate towards the middle- and high-end.

Channels will continue to expand towards Tier-3 and -4 cities. As future opportunities in the server market turn to Tier-3 and -4 cities, the directions for channel building will be to strengthen cooperation with regional channels, enlarge regional industry agents, step up vertical brand promotion and build upon regional dealers’ and SI/ISVs’ resources advantages to expand their products’ market shares.

The market pattern will change. In 2007, network equipment firms Huawei and ZTE entered the server field, causing a major impact on such main server suppliers as HP, SUN, IBM and DELL in the telecom industry. If ZTE and Huawei enter the enterprise-level market, competitions in the server market will intensify. The whole market pattern will change and a new round of reshuffling will be imminent.

The blade server market will become a new area of competitions. As technology matures, blade servers will become a product more suitable for deployment at data centers. And, the procurement demand will continue to expand. The blade server market is expected to enter a fast lane in the future. It is bound to become a focus of competitions.