Global server market revenues up 2.5% in Q2 as refresh cycle continues

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server revenues Server unit shipments improved 1.2 percent year-over-year in 2Q14 to 2.2 million units as investments in hyperscale datacenter capacity were largely offset by consolidation, which continued to be a strategic focus for many large and small customers around the globe. Additionally, IDC continues to see signs of a server refresh cycle that is expected to lift the market going forward. On a year-over-year basis, volume systems experienced 4.9 percent revenue growth. This was the fifth consecutive quarter that volume system demand increased year-over-year. Midrange systems also experienced growth of 11.6 percent year-over-year as technology refresh cycles began to positively impact the segment. Meanwhile, high-end enterprise systems experienced a year-over-year revenue decline of -9.8 percent primarily due to difficult annual comparisons in the segment. “The server market is experiencing the beginning of a cyclical refresh cycle as systems deployed shortly after the financial crisis are retired and replaced,? said Matt Eastwood, group vice president and general manager for enterprise platforms at IDC. ?IDC expects this refresh cycle will continue well into 2015 and be further accelerated by Microsoft’s announcement that it is ending support for Windows Server 2003 coupled with Intel’s forthcoming release of the Grantley Xeon EP and a significant number of related server platform announcements,” said Eastwood. “At the same time, IDC is also seeing early stage enterprise investment in 3rd Platform workloads that leverage Webscale architectures typically seen in hyperscale environments. These workloads will drive additional interest in software-defined environments that will further enhance the need for servers deployed as the infrastructure underpinning these next generation datacenters.” Overall server market standings by vendor HP held the number 1 position in the worldwide server market with 25.4 percent factory revenue share for 2Q14. HP’s 4.0 percent revenue growth included improving demand for x86-based ProLiant servers and continued weakness in Itanium-based Integrity server revenue. IBM held the number 2 spot with 23.6 percent share for the quarter as factory revenue decreased -10.2 percent compared to 2Q13. Demand for IBM’s Power -based systems declined sharply year-over-year in advance of a significant technology refresh. Dell maintained the third position with 16.6 percent factory revenue market share in 2Q14 as factory revenue declined -6.5 percent compared to 2Q13 as Dell works to re-align its PowerEdge server business with its solutions selling strategy. Oracle and Cisco ended the quarter in a two-way statistical tie for the number 4 position with 5.9 percent and 5.8 percent factory revenue share, respectively. Cisco’s 2Q14 factory revenue increased 35.4 percent compared to 2Q13, gaining 1.4 points of market share. Oracle’s factory revenue was up 3.9 percent year-over-year in 2Q14. Top server market findings

? Demand for x86 servers improved in 2Q14 with revenues increasing 7.8 percent year-over-year in the quarter to $9.8 billion worldwide as unit shipments increased 1.5 percent to 2.2 million servers. HP led the market with 29.6 percent revenue share based on 7.4 percent revenue growth over 2Q13. Dell retained second place, securing 21.2 percent revenue share.

? Non-x86 servers experienced a revenue decline of -12.8 percent year-over-year to $2.7 billion, representing 21.8 percent of quarterly server revenue. This was the twelfth consecutive quarter of revenue decline in the non-x86 server segment. IBM leads the segment with 69.1 percent revenue share following a year-over-year revenue decrease of -13.9 percent when compared with the second quarter of 2013.

? Blade servers, which are highly leveraged in enterprises’ virtualized and converged environments, increased 7.0 percent year-over-year to $2.1 billion. Blades now account for 17.0 percent of total server revenue. HP maintained the number 1 spot in the blade server market in 2Q14 with 42.2 percent revenue share; Cisco and IBM held the second and third positions in the blade market with 25.2 percent and 13.7 percent revenue share, respectively.

? Density-optimized servers, utilized by large homogeneous datacenters, experienced a difficult year-over-year comparison due to several large deployments that occurred in the second quarter of 2013. Revenue declined -7.6 percent year-over-year to $768 million as unit shipments decreased -16.1 percent to 216,314 servers. Density-optimized servers represent 6.1 percent of all server revenue and 9.7 percent of all server shipments.

? Regionally, Asia-Pacific (excluding Japan) and Western Europe experienced the sharpest growth with year-over-year revenue increases of 6.9 percent and 6.0 percent, respectively. China continued to exhibit significant growth with year-over-year revenue up 19.4 percent to $1.8 billion. The top 4 Chinese OEMs — Inspur, Huawei, Lenovo, and Sugon — all grew revenue on a year-over-year basis by more than 35 percent.

“Modular servers ? blades and density-optimized ? represent distinct segments of growth for vendors in an otherwise mature market,” said Jed Scaramella, research director for enterprise servers and datacenter at IDC. “As the building block for integrated systems, blade servers will continue to drive enterprise customers along the evolutionary path toward private clouds. On the opposite side of the spectrum, density-optimized servers are being rapidly adopted by hyperscale datacenters that favor the scalability and efficiency of the form factor.” “Demand for servers in the public cloud continues to be a major driving force for server market growth,” said Kuba Stolarski, research manager for enterprise servers at IDC. “While many of the largest of these companies have already undergone periodic datacenter expansions over the past year, public cloud demand for new servers will continue to outpace the general market in the immediate future. As these customers search for new ways to maximize datacenter efficiency, their technological choices may help accelerate emerging trends in low power and alternative server architectures.”]]>

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