Third-quarter revenue in the worldwide server market increased 4.2 percent over the same quarter last year, to $12.7 billion, according to IDC's Worldwide Quarterly Server Tracker. Although this is the seventh consecutive quarter of year-over-year revenue growth, it is the slowest quarterly growth rate since the market recovery began in the first quarter of 2010, as year-over-year comparisons become more difficult.
Third-quarter server unit shipments increased 4 percent year over year; however, server shipment growth moderated from the 8.7 percent year-over-year shipment gain reported in the second quarter of 2011.
Improved market conditions were seen across all three server classes: volume, midrange enterprise and high-end enterprise. Volume systems experienced a 5 percent year-over-year revenue increase, the eighth consecutive quarter of positive growth for the segment. Midrange enterprise demand improved for the fifth time in the past six quarters, with a 4.7 percent year-over-year revenue increase. Finally, the improving market conditions extended to the high-end enterprise segment, as quarterly revenue increased 1.1 percent from the third quarter of 2010. This is the third consecutive quarter that all three segments of the server market have experienced a year-over-year revenue increase in the same quarter.
"After nearly two years of steady revenue growth, the server market began to decelerate in Q3 2011 as demand stabilized for many system categories," said Matt Eastwood, group vice president and general manager of enterprise platforms at IDC. "Asia/Pacific and Japan exhibited strong revenue growth while server demand in EMEA [Europe, Middle East and Africa], North America and Latin America was flat to slightly down year over year. IDC continues to believe that weakening macroeconomic conditions around the world will serve to further moderate demand for new servers in 2012."
IBM and HP jointly held the No. 1 position in the worldwide server market with 29.8 percent each on factory revenue share, respectively, for 3Q11, a statistical tie. IBM experienced 3.5 percent year-over-year growth in factory revenue with particular strength in Power Systems demand. HP lost 2.5 points of share in 3Q11 as factory revenue declined 3.8 percent year over year largely because of weakening demand for Itanium-based Integrity systems.
Dell maintained third place with 15.1 percent factory revenue market share in the third quarter. Dell gained 1.2 points of share year to year on 13.1 percent revenue growth, driven in part by richer product configurations. Oracle maintained the No. 4 position in the worldwide server market, with a year-over-year revenue decline of 3.2 percent in the latest quarter, and now holds 6 percent market share. Fujitsu, which rounded out the top 5 vendors, experienced a 0.4 percent decrease in factory revenue, holding 4.8 percent revenue share in the third quarter.
The report noted that Linux server demand was positively impacted by strong x86 server deployments, as hardware revenue improved in the third quarter to $2.3 billion, up 12.3 percent from the same period last year. Linux servers now represent 18.6 percent of all server revenue, up 0.9 points from the third quarter of 2010. Microsoft Windows server demand also improved in the latest quarter as hardware revenue increased 5.3 percent and unit shipments increased 2 percent year over year. Quarterly revenue of $6.3 billion for Windows servers represented 49.7 percent of overall quarterly factory revenue.
Unix servers experienced 1.6 percent year-over-year revenue growth to $2.6 billion, representing 20.1 percent of quarterly server revenue for the quarter. IBM grew Unix server revenue 14 percent year over year and gained 5.1 points of Unix server market share when compared with the third quarter of 2010. After four consecutive quarters of growth driven by strong demand for IBM's zEnterprise mainframes, revenue for System z servers running z/OS declined 4.5 percent year over year to $970 million, representing 7.6 percent of all server revenue in the most recent quarter.