Bangalore: Spending by the Indian companies on computer servers has come down drastically, as the investments in the first quarter of 2009 have come down to Q2, 2006 levels. Server market in India in Q1 declined 29.6 percent year by year to $154 million, as happened in Q2 of 2006.

Analysts have warned that the trend may continue. As per the latest available data from industry tracker IDC India, this is the second consecutive quarter of revenue declines. Gartner India had also estimated a steep fall in Q1 server sales to $130 million from $150 million in Q4, 2008.

Server sales fell drastically in Q1 compared with the same quarter last year. X86 server shipments have contracted 26 percent to just 25,156 units, IDC numbers showed.

Servers based on the x86 architecture constitute the biggest chunk of the market with a share upwards of 50 percent, as the Indian server market is estimated variedly between $750 million and $800 million.

"Market conditions worsened during Q1 as most enterprises either postponed or downsized their new strategic IT projects and ongoing infrastructure-refresh initiatives," said Amit Dalal, Analyst, IDC.

"IT refresh in subsequent quarters too could be minimal, adding large customers have cut down spending drastically. Thus Q2 would be flat, with sales in the same range as Q1," said Dalal.

The fall in Q1 comes after contraction by 28 percent in the December quarter when the slowdown had hit.