IDC expects the situation to worsen with a sharp 41.3% YoY decline forecast in Q2. The server market in 2020 is expected to decline by 22.3% in terms of value.

According to IDC, spending from two of the largest telecom vendors in India will be directed towards network modernization, VoLTE, and cloud infra projects, while banks will focus on refreshes.

The x86 servers which accounts for 85.2% of the entire server market in terms of revenue declined YoY by 25.3% to $197.9 million.

Telecom, banking and manufacturing verticals were the key drivers for the x86 category of servers with big orders coming from telecom vendors, nationalized banks, digital payments companies and semiconductor manufacturing companies during the first quarter.

The decline was a result of lack of spending from global hyperscalers and prolonged deals which spilled over from the quarter before it.

Dell Technologies was the top vendor in the x86 server category in India with a market share of 36.0% and revenue of $71.3 million in Q1 2020.

“The market sentiment is pessimistic, and we anticipate a sharp decline for the server market revenue in Q2. As the lockdown continues to negatively impact working capital across businesses, buyers are now employing capital preservation strategies for future usage resulting in low spending on current IT requirements,” Harshal Udatewar, market analyst, Server, IDC India said in a statement.

The non-x86 server category performed a lot better, growing YoY by 3.6% generating revenue of $34.2 million in Q1 2020. IBM was the leading vendor in this category with 74.1% of market share and revenue of $25.4 million. The traction largely came from the banking sector to handle internet banking overloads.