Hewlett-Packard and Dell in the first quarter continued to lead a global server market that saw a worldwide revenue increase of 17.2 percent and shipment grow jump of 8.4 percent year-over-year, with gains hitting all form factors, according to analysts with IDC.
In numbers released May 27, the market research firm reported that revenue hit $12.8 billion during the first three months of the year, with shipments totaling 2.3 million units. Rack, blade and tower servers all saw revenue increases, but it was the density-optimized systems aimed at hyperscale data centers that drew much of the analysts’ attention.
Volume system revenue jumped 13.6 percent over the same period in 2014, driven in part by the continued expansion of hyperscale data centers. Organizations that run these massive data centers tend to buy lots of volume servers at once, which causes greater variability from quarter to quarter when compared with more stable traditional form factors, according to Al Gillen, program vice president of servers and system software at IDC.
“We continue to see a market profile that is increasingly driven by new compute deployment scenarios, often in hyperscale data centers,” Gillen said in a statement. “Shipments of density-optimized servers tend to land in a given region in a given quarter, and either in a different region, or not at all, in the subsequent quarter. This leads to a relatively unpredictable profile.”
He noted that in the first quarter this year, shipments of density-optimized servers grew 26.1 percent year-over-year and revenue increased 51.6 percent. However, in the fourth quarter 2014, the density-optimized server market saw both shipments and revenue fall, Gillen said.
According to IDC analysts, both HP and Dell recorded revenue increases in their density-optimized server business. HP, which offers its low-power Moonshot systems—which use both x86 processors from Intel and Advanced Micro Devices and chips from ARM partners Applied Micro and Texas Instruments—saw its density-optimized server business triple in growth from the first quarter 2014, according to IDC.
HP’s server revenue grew 10.6 percent in the quarter, driven primarily by demand for its rack-optimized ProLiant servers, the analyst said. The company in the quarter held 24.9 percent of the market.
Dell’s server revenue increased 12.6 percent, also thanks in part to its rack-optimized server business. However, the company—whose lineup includes the PowerEdge FX highly dense converged infrastructure—also saw the most revenue for density-optimized servers of any vendor in the top five.
Dell, which held 18 percent of the market in the quarter, is working to meet the changing demands from organizations as they outfit their data centers, according to Matt Baker, executive director of enterprise strategy for Dell’s Enterprise Solutions Group.
“The server market has moved away from customers buying boxes to a model where customers are increasingly looking toward holistic integrated solutions that simplify workloads and are built on open and innovative technology,” Baker said in an email to eWEEK. “Dell is executing on its compute-centric strategy and focusing on bringing storage closer to compute to increase performance and simultaneously simplify management, therefore accelerating workloads and dramatically improving IT investment ROI, both at the hardware and solutions layer.”
IBM, which last fall sold its x86 server business to Lenovo for $2.1 billion, held onto the No. 3 spot—with 13.2 percent market share—on the strength of its Power systems and mainframes, according to IDC analysts. Still, with the x86 server business gone, Big Blue saw its revenue fall 18.7 percent over the same period last year.
Hyperscale Data Centers Drive Server Growth in Q1: IDC
Lenovo jumped into the top-five rankings thanks to the acquisition of the IBM unit. It essentially tied with Cisco Systems for fourth, with 7.5 percent market share and a 721.6 percent jump in revenue, the analysts said. Cisco had 6.9 percent of the market, with year-over-year revenue growth of 44.4 percent. Given the strong revenue growth, Cisco is expected to continue to gain market share in the server space on the strength of its United Computing System (UCS), according to analysts.
IDC said it declares a statistical tie when there is less than 1 percent different in revenue share between vendors, which is why the analysts said Lenovo and Cisco tied for fourth.
Also of note was the continued strength of white-box makers. According to IDC’s numbers, these original design manufactures (ODMs) combined captured 7.6 percent of the market and saw revenue increase by 22 percent. The rise of hyperscale data centers, software-defined infrastructures, cloud environments, big data and mobility has helped fuel the growing demand for white boxes in not only servers, but also networking and storage. Businesses also are looking for hardware that is optimized for particular workloads. In the server space, ODMs include Foxconn, Quanta, Pegatron and Stack Velocity and others.
In addition, the market for high-end systems—driven in large part by IBM’s z13 mainframe refresh—saw revenue grow 44.7 percent, to $2.1 billion, and revenue for non-x86 servers, which have seen sharp declines in recent quarters, jumped 31.6 percent over what IDC called a weak first quarter 2014.
“As the market continued to focus on healthy hyperscale datacenter growth, non-x86 servers, in particular high-end mainframes, had significant growth this quarter on the back of IBM’s z13 refresh,” Kuba Stolarski, research manager for enterprise servers at IDC, said in a statement. He added, however, that he doesn’t expect the market to continue growing at such rates. “This quarter does illustrate that there is still significant demand for high-end systems. Even as high-end systems are increasingly being deployed on x86 platforms, opportunities for long-term non-x86 growth still exist with OpenPower and ARM, as customers are looking for non-x86 alternatives to hyperscale problems,” he said.
