Sales of servers worldwide fell almost 25% in the first three months of 2009, against the same period a year earlier, according to market research firm IDC.Global sales were $9.9 bn (£6.14 bn), IDC said, the lowest figure since the firm started monitoring the computer server market 12 years ago.
Dell was the vendor hardest hit, with server revenue falling 31.2%.
IDC said they expected the situation to continue, although they predicted some recovery by 2010.
"Market conditions worsened in all geographic regions during the first quarter as customers of all types pulled back on both new strategic IT projects and ongoing infrastructure refresh initiatives," said Matt Eastwood, IDC's group vice president.
All three server sectors - volume, midrange, and high-end systems - registered a decline in sales. This is the first time this has happened since 2002.
The five big server vendors - HP, IBM, Dell, Sun Microsystems and Fujitsu/Fujitsu Siemens - all suffered a double digit percentage drop in revenue.
Revenue decline
Server operating system revenue also declined, IDC said.
Revenues for Unix servers fell 17.5% compared with the same period a year earlier.
Revenues for IBM's System z servers, running the z/OS operating system, fell 18.9%. Microsoft Windows server revenues fell 28.9% to $3.7bn and Linux server revenues fell 24.8% year-over-year to $1.4 billion, its lowest in five years.
Mr Eastwood said companies had suspended buying new equipment and were focusing on extending the lifespan of existing products.
"While these strategies are effective in the near term, server demand will begin to improve in the second half of the year as customers begin to rebuild their IT capabilities in advance of a meaningful economic recovery in 2010," he said.
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