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Hewlett-Packard, IBM and Dell continued their dominance of the global server market, but Cisco Systems—on the back of its Unified Computing System converged data center offering—has muscled its way into the top five, according to numbers released by analyst firms Gartner and IDC.
Cisco tied with Fujitsu and Oracle for fourth place in fourth-quarter 2012 server revenue, and tied with Fujitsu for fifth in revenue for the entire year, IDC analysts said in a Feb. 27 report. Meanwhile, Gartner said Feb. 27 that Cisco placed fifth in server shipments for the quarter, and was the only vendor in the top five to see a growth in shipments, with a 40.9 percent jump over the same quarter in 2011.
Cisco executives for more than a year have touted the strong growth of their UCS offering, which provides Cisco server and networking products, storage from EMC and NetApp and virtualization technology from VMware in a converged, modular solution for data centers. In a conference call with analysts and journalists Feb. 14 to discuss fourth-quarter financial numbers, Cisco CEO John Chambers said the company now has more than 20,000 UCS customers, and that the UCS, combined with Nexus switch products, has been a key driver of Cisco’s data center business, which saw a 65 percent rise in revenue.
Cisco introduced the UCS in 2009, a signal that the company was looking to expand its presence in the data center beyond networking equipment and a move that has made Cisco a top seller for blade systems and put it into more direct competition with such vendors as IBM and HP.
The strength of Cisco’s UCS offering also is indicative of where the server market is headed, with x86-based systems becoming an increasingly large percentage of the overall number of servers shipped worldwide and a growing demand for modular form factors, which include blades that are used by enterprises for their virtualized and private cloud environments and density-optimized systems found in large data centers run by the likes of Facebook and Google as well as service providers, according to IDC analysts.
“Both types of modular form factors outperformed the overall server market, indicating customers are increasingly favoring specialization in their server designs” Jed Scaramella, research manager for enterprise servers for IDC, said in a statement. “Density Optimized servers were positively impacted by the growth of service providers in the market. In addition to HPC [high-performance computing], cloud and IT service providers favor the highly efficient and scalable design of Density Optimized servers. … IDC is observing an increased interest from the market for converged systems, which use blades as the building block. Enterprise IT organizations are viewing converged systems as a method to simplify management and increase their time to value.”
Cisco’s UCS Drives the Vendor Onto Top 5 Server Lists
Overall, both IDC and Gartner analysts found that server revenue worldwide increased in the fourth quarter, while shipments fell. IDC found that server revenue in the quarter grew 3.1 percent from the same period in 2011, to $14.6 billion—the first quarterly increase in revenue in five quarters—while shipments fell 3.9 percent, to 2.1 million units. For all of 2012, revenue fell 1.9 percent from 2011 while shipments decreased 1.5 percent.
Gartner analysts said that revenue in the quarter jumped 5.1 percent while shipments fell 0.2 percent, but for 2012, revenue fell 0.6 percent and shipments jumped 1.5 percent.
“2012 was a year that definitely saw budgetary constraint which resulted in delays in x86-based server replacements in enterprise and midsized data centers,” Jeffrey Hewitt, research vice president at Gartner, said in a statement. “Application-as-a-business data centers such as Baidu, Facebook and Google were the real drivers of significant volume growth for the year.”
Both Gartner and IDC had IBM, HP and Dell as one, two and three, respectively, in server revenue for the quarter. Gartner analysts said they expect modest growth in overall server sales for 2013.
The x86 server market, thanks in large part to new and enhanced offerings based on the Xeon Sandy Bridge chips Intel introduced in early 2012, saw revenue climb 6 percent in the quarter, the sharpest quarterly increase ever, according to IDC analysts. The x86 servers accounted for 66.2 percent of all the server revenue generated globally, they said. Both HP and Dell saw their x86 server revenue increase during the quarter, while Cisco saw a 50.7 percent increase in its server revenue, they said.
Gartner’s Hewitt said it was other server platforms that held back the overall market.
“Relatively weak mainframe and RISC/Itanium Unix platform market performance kept overall revenue growth in check,” he said.
However, Jean Bozman, research vice president for IDC’s Enterprise Platforms Group, said IBM’s System z mainframe business saw the highest quarterly revenue since 1997, with revenue increasing 55.6 percent after five consecutive quarters of falling sales. The $1.8 billion in mainframe revenue in the fourth quarter was 12.3 percent of all server revenue, according to IDC.
“This dramatic growth was due to several factors: technology refresh, new products such as zEnterprise, new accounts in emerging economies, and consolidation of some enterprise Linux workloads onto IBM System z, using the Integrated Facility for Linux (IFL) specialty engines,” Bozman said in a statement. “Although revenue results for System z are traditionally heavier in the fourth quarter, this accelerated acquisition shows the breadth and depth of the IBM mainframe installed base.”