Hyperscale data center environments continue to play an outsized role in the health of the worldwide server market, the analysts say.
The global server market continues to see its fortunes tied in large part to the increasingly important hyperscale infrastructure space for cloud computing environments, according to analysts from IDC and Gartner.
The market research firms released their respective first-quarter numbers for the worldwide server market, and while there were variations in the figures from the analysts, both agreed that the hyperscale space continues to be the key driver in the market.
IDC analysts found that both server revenue and shipments in the first three months of the year fell due to both a pause in the deployment of servers into hyperscale environments
as well as the ending of the system refresh cycle in enterprises. For their part, Gartner analysts said revenue fell 2.3 percent from the same period in 2015, even as shipments increased 1.7 percent year-over-year.
"The drop in revenues in light of shipment increases demonstrates that the servers that shipped during the period had lower average selling prices than those that shipped in the same time frame last year," Jeffrey Hewitt, research vice president at Gartner, said in a statement. "The real driver of global growth continues to be the hyperscale data center segment. The enterprise and small or midsize business (SMB) segments remain relatively flat as end users in these segments accommodated their increased application requirements through virtualization and considered cloud alternatives."
IDC analysts said worldwide server revenue in the first quarter dropped 3.6 percent, to $12.4 billion, marking the end to seven consecutive quarters of year-over-year growth. Shipments fell 3 percent, to 2.2 million units, they said.
Kuba Stolarski, research director of computing platforms at IDC, said in a statement that not only did the hyperscale space and the end of the refresh cycle—led by the release of new 14-nanometer chips by Intel—play a role, but so did a significant refresh by IBM of its mainframe line with the launch of the z13 system
and the introduction of complementary offerings, which inflated the first-quarter 2015 numbers and made year-to-year comparisons difficult.
"Now that the cyclical refresh has come to an end, the market focus is shifting toward software-defined infrastructure, hybrid environment management, and next-gen IT domains such as the Internet of things (IoT), robotics and cognitive analytics," Stolarski said. "In the short term, IDC expects the second half of 2016 to re-energize hyperscale cloud infrastructure expansion with existing data centers filling out and new cloud data centers standing up across the globe."
Among vendors, Hewlett Packard Enterprise increased its market share lead and was the only systems OEM to see server revenue increase—3.3 percent, according to Gartner, or 3.5 percent, per IDC. HPE's market share is now between 25.2 percent (Gartner) and 26.7 percent (IDC).
Dell and IBM were numbers two and three in the results from both analyst firms. IDC said Lenovo and Cisco Systems essentially tied for the fourth-place slot, with original design manufacturers (ODMs) coming in fifth. Lenovo edged Cisco for the number-four position in Gartner's findings.
In both, IBM saw revenue declines of more than 32 percent, the continuing result of the sale by Big Blue of its x86 server business to Lenovo two years ago for $2.3 billion. Meanwhile, IDC analysts also pointed to a difficult comparison to the first quarter in 2015 for IBM because of the z13 mainframe launch during the same period a year ago.
IDC analysts also said that revenue for x86 servers—almost all of which were running Intel chips—grew 2.6 percent, even though shipments fell 2.9 percent. At the same time, non-x86 system revenue fell 28.7 percent. It not only included the Unix market, but also ARM-based servers, which saw sales fall in the first quarter, they said. The bulk of ARM server chip sales are tied to HPE's Moonshot systems, they said.