Welcome!

News Feed Item

Worldwide Server Market Revenues Decline 4.0% in Third Quarter as Market Demand Remained Soft, According to IDC

According to the International Data Corporation (IDC) Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market decreased 4.0% year over year to $12.2 billion in the third quarter of 2012 (3Q12). This is the fourth consecutive quarter of year-over-year revenue decline, as server market demand continued to soften following a strong refresh cycle that characterized the market in most of 2010 and 2011. After declining in 2Q12, server unit shipments increased 0.6% year over year in 3Q12 to 2.1 million units. This was the 11th time in the past 12 quarters that server units have grown on a year-over-year basis.

On a year-over-year basis, volume systems experienced a 0.5% revenue decline. At the same time, demand for midrange and high-end systems experienced year-over-year revenue declines of 14.0% and 8.9% respectively in 3Q12. All three segments were impacted by difficult year-over-year compares combined with transitions in the technology refresh cycles.

"Worldwide server revenue declined for the fourth consecutive quarter in 3Q12. The market was constrained by poor macro-economic conditions in many geographies coupled with a number of technology transitions that served to further hamper the market," said Matt Eastwood, group vice president and general manager, Enterprise Platforms at IDC. "In fact, every geographic region except Asia/Pacific experienced revenue contraction in the quarter. The growth in Asia/Pacific was largely driven by strong demand in China, which helped a China-based server vendor – Inspur – into a top 10 factory revenue position for the first time."

Overall Server Market Standings, by Vendor

IBM held the number 1 position in the worldwide server market with 28.7% factory revenue share for 3Q12. IBM experienced a 7.6% year-over-year decline in factory revenue losing 1.1 points of share in the quarter on soft demand for System z ahead of a recently announced product transition. HP held the number 2 position with 27.3% factory revenue share following an 11.9% year-over-year revenue decline in 3Q12. HP continued to experience declines in HP Integrity server demand combined with relatively weak performance in their x86-based ProLiant server business. Dell maintained third place with 17.1% factory revenue market share in 3Q12. Dell's factory revenue increased 8.2% compared to 3Q11, helping Dell to its highest server market share in any quarter. Oracle maintained the number 4 position with 4.8% factory revenue share; Oracle's 3Q12 factory revenue decreased 23.1% compared to 3Q11. Fujitsu ended the quarter in the number 5 market position with 3.8% factory revenue share following a 22.2% year-over-year decline in server revenue.

Top Server Market Findings

  • Linux server demand continued to be positively impacted by high performance computing (HPC) and cloud infrastructure deployments, as hardware revenue increased 6.6% year over year to $2.6 billion in 3Q12. Linux servers now represent 21.5% of all server revenue, up 2.1 points when compared with the third quarter of 2011.
  • Microsoft Windows server hardware demand was down 0.9% year over year in 3Q12 with quarterly server hardware revenue totaling $6.2 billion representing 51.1% of overall quarterly factory revenue, up 1.6 points over the prior year's quarter. This is the second time in the past three quarters that Windows has been responsible for driving more than half of all server spending worldwide.
  • Unix servers experienced a revenue decline of 14.2% year over year to $2.1 billion representing 17.3% of quarterly server revenue for the quarter, the lowest percentage of server spending in more than 10 years. IBM's Unix server revenue increased by a modest 0.8% year over year; however IBM still managed to gain 7.9 points of Unix server market share when compared with the third quarter of 2011.
  • The market for non-x86 servers, including servers based on RISC, EPIC (Itanium-based), and CISC processors, declined 17.1% year over year to $3.3 billion in 3Q12. This is the fifth consecutive quarter in which non-x86 servers have exhibited a revenue decline. Non-x86 based systems now comprise 27.0% of the server market, the lowest percentage of server spending ever recorded by IDC.

"The Unix server market continued to struggle ahead of year-end refresh cycles," said Kuba Stolarski, research manager, Enterprise Servers at IDC. "IDC expects a short-term easing in the high-end market's decline as technology refreshes, including Intel's Poulson update to its Itanium line, begin to take their course. However, mission critical applications continue to migrate to x86 platforms, placing increasing pressure on the high-end server market."

x86 Industry Standard Server Market Dynamics

Demand for x86 servers continued to improve in 3Q12, with revenues growing 2.0% in the quarter to $8.9 billion worldwide as unit shipments were up 1.5% to 2.1 million servers. HP led the market with 32.0% revenue share based on an 8.7% revenue decline when compared to 3Q11. Dell retained second place, securing 23.4% of revenue share while gaining 1.3 points of share when compared with the third quarter of 2011. IBM rounded out the top three positions, holding 16.5% revenue share following a 4.7% year-over-year revenue decline. Overall, this was the thirteenth time in the previous fourteen quarters with a year-over-year increase in average selling prices for x86 servers as both the mix of systems and average system configurations continue to move up-market, helped in part by the increased focus leading suppliers have on converged infrastructure.

Bladed Server Market Results

The blade market continued its solid growth in the quarter with factory revenue increasing 2.9% year over year and shipment growth declining by 1.1% compared to 3Q11. Overall, bladed servers, including x86, EPIC, and RISC blades, accounted for $2.1 billion in revenues, representing 17.2% of quarterly server market revenue, a record high. More than 91% of all blade revenue is driven by x86-based blades, which now represent 21.5% of all x86 server revenue. HP maintained the number 1 spot in the server blade market in 3Q12 with 45.9% revenue share, while IBM finished with 19.0% revenue share. Cisco and Dell rounded out the top 4 with 15.0% and 8.1% factory revenue share, respectively.

"Modular form factors continue to gain favor with server customers," said Jed Scaramella, research manager, Enterprise Servers at IDC. "Many enterprises are exploring converged systems, which are built on top of blades. These platforms present vendors with the opportunity to increase their customer share of wallet through the attached sale of storage, networking, and services. On the opposite side of the spectrum, large cloud datacenters and service providers value the efficiencies and scalability of density optimized servers. Together these two form factors account for 22.9% of server revenue, gaining 3.3 points from a year ago."

Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, Third Quarter of 2012

(Revenues are in $ Millions)

                   
Vendor

3Q12
Revenue

3Q12 Market
Share

3Q11
Revenue

3Q11 Market
Share

3Q12/3Q11
Revenue
Growth

1. IBM $3,502 28.7% $3,789 29.8% -7.6%
2. HP $3,339 27.3% $3,792 29.8% -11.9%
3. Dell $2,086 17.1% $1,929 15.2% 8.2%
4. Oracle $588 4.8% $764 6.0% -23.1%
5. Fujitsu $465 3.8% $598 4.7% -22.2%
Others $2,238 18.3% $1,854 14.6% 20.7%
All Vendors $12,219 100% $12,727 100% -4.0%

Source: IDC Worldwide Quarterly Server Tracker, November 2012.

In addition to the table above, a graphic showing the relative market shares of the top 5 server vendors for 3Q12 and 3Q11 is available at IDC.com. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.

IDC's Server Taxonomy

IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers, midrange servers and high-end servers. The revenue data presented in this release is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments.

IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture. For more information, please contact Lidice Fernandez at 305-351-3051 or [email protected].

About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community to make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 48 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

All product and company names may be trademarks or registered trademarks of their respective holders.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
"We are focused on SAP running in the clouds, to make this super easy because we believe in the tremendous value of those powerful worlds - SAP and the cloud," explained Frank Stienhans, CTO of Ocean9, Inc., in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"Peak 10 is a hybrid infrastructure provider across the nation. We are in the thick of things when it comes to hybrid IT," explained , Chief Technology Officer at Peak 10, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We are still a relatively small software house and we are focusing on certain industries like FinTech, med tech, energy and utilities. We help our customers with their digital transformation," noted Piotr Stawinski, Founder and CEO of EARP Integration, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"I think DevOps is now a rambunctious teenager – it’s starting to get a mind of its own, wanting to get its own things but it still needs some adult supervision," explained Thomas Hooker, VP of marketing at CollabNet, in this SYS-CON.tv interview at DevOps Summit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We've been engaging with a lot of customers including Panasonic, we've been involved with Cisco and now we're working with the U.S. government - the Department of Homeland Security," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held June 6-8, 2017, at the Javits Center in New York City, NY.
Everything run by electricity will eventually be connected to the Internet. Get ahead of the Internet of Things revolution and join Akvelon expert and IoT industry leader, Sergey Grebnov, in his session at @ThingsExpo, for an educational dive into the world of managing your home, workplace and all the devices they contain with the power of machine-based AI and intelligent Bot services for a completely streamlined experience.
Any startup has to have a clear go –to-market strategy from the beginning. Similarly, any data science project has to have a go to production strategy from its first days, so it could go beyond proof-of-concept. Machine learning and artificial intelligence in production would result in hundreds of training pipelines and machine learning models that are continuously revised by teams of data scientists and seamlessly connected with web applications for tenants and users.
"We're here to tell the world about our cloud-scale infrastructure that we have at Juniper combined with the world-class security that we put into the cloud," explained Lisa Guess, VP of Systems Engineering at Juniper Networks, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"I will be talking about ChatOps and ChatOps as a way to solve some problems in the DevOps space," explained Himanshu Chhetri, CTO of Addteq, in this SYS-CON.tv interview at @DevOpsSummit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We are an IT services solution provider and we sell software to support those solutions. Our focus and key areas are around security, enterprise monitoring, and continuous delivery optimization," noted John Balsavage, President of A&I Solutions, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
Your homes and cars can be automated and self-serviced. Why can't your storage? From simply asking questions to analyze and troubleshoot your infrastructure, to provisioning storage with snapshots, recovery and replication, your wildest sci-fi dream has come true. In his session at @DevOpsSummit at 20th Cloud Expo, Dan Florea, Director of Product Management at Tintri, provided a ChatOps demo where you can talk to your storage and manage it from anywhere, through Slack and similar services with...
The financial services market is one of the most data-driven industries in the world, yet it’s bogged down by legacy CPU technologies that simply can’t keep up with the task of querying and visualizing billions of records. In his session at 20th Cloud Expo, Karthik Lalithraj, a Principal Solutions Architect at Kinetica, discussed how the advent of advanced in-database analytics on the GPU makes it possible to run sophisticated data science workloads on the same database that is housing the rich...
DevOps at Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to w...
All organizations that did not originate this moment have a pre-existing culture as well as legacy technology and processes that can be more or less amenable to DevOps implementation. That organizational culture is influenced by the personalities and management styles of Executive Management, the wider culture in which the organization is situated, and the personalities of key team members at all levels of the organization. This culture and entrenched interests usually throw a wrench in the work...
"We want to show that our solution is far less expensive with a much better total cost of ownership so we announced several key features. One is called geo-distributed erasure coding, another is support for KVM and we introduced a new capability called Multi-Part," explained Tim Desai, Senior Product Marketing Manager at Hitachi Data Systems, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.