Hewlett-Packard and Dell in the second quarter continued to lead a worldwide server market that is still growing despite challenges in the global economy and a slowdown in the midrange system market, according to analysts with IDC and Gartner.
IDC on Aug. 25 said that server revenues during the second three months of the year rose 6.1 percent, to $13.5 billion, over the same period last year, while shipments jumped 3.2 percent, to 2.29 million units. A day later, Gartner analysts said that server revenues increased 7.2 percent while shipments rose 8 percent.
Both analyst firms said the numbers indicated that businesses are continuing to invest in their data center infrastructures in face of forces going on both inside and outside their environments. The challenge inside the data center is coming from the ongoing transition to increasing use of open-source software, according to Al Gillen, program vice president for servers and system software at IDC.
"The recent growth trend in the server market is confirmation of the larger IT investment taking place, despite dramatic change occurring in system software thanks to open source projects such as Docker and OpenStack," Gillen said in a statement. "While we do anticipate an impact on product mix and potentially on volumes, it is too early in the adoption cycle for these new software products to have a material impact on servers today. In the meantime, the market demonstrated healthy revenue and shipment growth this quarter."
According to IDC, revenue for volume systems grew 8.1 percent due to the continued demand for x86-based servers in hyperscale environments and the refresh by enterprise and small and midsize businesses (SMBs) of their x86 infrastructures. However, revenues for midsize systems shrunk 5.4 percent as the refresh of x86 servers in that market ran out of steam.
Gartner analysts noted the overall growth in the server space in the second quarter, but said economic conditions worldwide put pressure on the market and changed the buying patterns of some organizations.
"Currency exchange rate changes have started to show their impact by reducing relative spending power in regions like Western Europe," Jeffrey Hewitt, research vice president for Gartner, said in a statement. "It is likely that in anticipation of further currency rate shifts that some organizations utilized their budgets earlier in the year rather than waiting until the third or fourth quarters when their purchasing power may be further reduced by these relative currency changes."
The high-end server market was helped by the release in January by IBM of its z13 mainframe, according to the analysts. Hewitt noted that shipments and revenues for Unix and Intel Itanium systems fell, but that mainframes saw a revenue increase of 7.8 percent. Kuba Stolarski, research manager for enterprise servers at IDC, said after a big revenue jump in the first quarter, the z13 continued to see momentum in the second quarter, though somewhat slower.
"As some customers migrate their high-end workloads to new scale-up x86 platforms, opportunities for long-term non-x86 growth still exist with OpenPower and ARM, two of the most oft-mentioned potential alternatives to x86 architecture for hyperscale and cloud settings," Stolarski said in a statement. "As customers look to the future, alternatives to contemporary IT solutions reside not just in chip architecture, but throughout the value chain: from software defined solutions, to disaggregation and composable systems, to network-deployed, edge-enabled IoT [Internet of things] compute, the server market landscape is changing dramatically."
HP and Dell both saw decent revenue growth in the quarter, but there was a lot of change below that, due to Lenovo buying IBM's x86 server business last year for $2.1 billion. In both analyst lists, IBM remained in third place, but saw its revenue decline by as much as 34.3 percent, while revenue for Lenovo—in fourth—jumped by as much as 556 percent. Cisco Systems remained tied with Lenovo for fourth (according to IDC) and in fifth (Gartner said), with revenue jumping more than 19 percent on each list.