Skip to main content

Cloud Services Continue to Drive IT Server Market Shift

The shift to public cloud computing continues to impact on-premises IT data centers. Vendor revenue in the worldwide server market declined 4.6 percent year-over-year to $11.8 billion in the first quarter of 2017 (1Q17), according to the latest market study by International Data Corporation (IDC).

Overall server market growth continues to slow down with most hyperscale service providers waiting until the second half of the year for new investment. High-end server sales continue to be a drag on overall market performance.

The market has also been negatively affected by DRAM pricing issues. Worldwide server shipments increased 1.4 percent year over year to 2.21 million units in 1Q17. That said, one customer accounted for more than 10 percent of the servers shipped in 1Q17.

IT Server Market Development

Volume server revenue declined by 3.4 percent to $9.5 billion, while mid-range server revenue grew 16.5 percent to $1.3 billion. Demand for high-end systems experienced a year-over-year revenue decline of 29 percent to $1 billion. IDC expects continued long-term secular declines in high-end system revenue.

"The server market continues to struggle to find growth," said Kuba Stolarski, research director at IDC.

According to the IDC assessment, as the market prepares for the switch to Intel Skylake this year, we may be witnessing a shift in how workloads are deployed in the future, and what architectural choices will be made around modularity, operating environments, software, and cloud services.

As indicated by this quarter's results, one large server customer appears to be betting on a major transition to cloud services, as it alone accounted for approximately a quarter of a million servers deployed in the first quarter.

Results for the quarter were right in line with what IDC had forecast in the fourth quarter of 2016. Demand for two-socket form factors continues to control a majority of unit shipments now and going forward as they are the focal point for density-optimized servers.

Two-socket machines are attractive for data center deployment in terms of both power usage and cost per server. Their growth rate may slow down over the short term and, because they control a significant portion of the overall server market, the growth rate will be dampened worldwide.

Outlook for Server Market Momentum

On a geographic basis, Central and Eastern Europe (CEE) was the fastest growing region with 7.2 percent year-over-year growth, followed by Canada with 2.8 percent, and Asia-Pacific (excluding Japan) with 0.9 percent.

Within the Asia-Pacific region, China grew a modest 1.7 percent. the United States declined 2.3 percent, Japan declined 4.3 percent, Western Europe declined 14.3 percent, Latin America declined 14.6 percent, and Middle East and Africa declined 14.8 percent.

Demand for x86 servers was flat (0 percent) in 1Q17 with $10.6 billion in revenues. Non-x86 servers declined 30.9 percent year-over-year to $1.3 billion. These results continue to indicate an apparent lack of server market momentum.

Popular posts from this blog

Hybrid Work: How to Enhance Employee Productivity

When you hire qualified talent for a key role and trust them to perform, you'll likely achieve the best outcome. Skilled and experienced people will deliver results, regardless of the challenges. That's a key lesson learned from the pandemic experience as most knowledge workers were asked to work from their homes. However, some resist returning to an open-plan office. It's unacceptable. Meanwhile, forward-thinking leaders decided a "return to normal" is undesirable, and in hindsight, everyone should aspire to be more accomodating than before. Therefore, location flexibility is okay. Hybrid Workforce Market Development How will people adapt to these changes? They'll apply the modern IT tools at their disposal. They'll learn new skills and thrive. Nearly 80 percent of employees are now successfully using online collaboration tools for work in 2021 -- that's up from just over half of workers in 2019, according to the latest market study by Gartner. This g

Mobility-as-a-Service Creates Disruptive Travel Options

Building on significant advances in big data, analytics, and the Internet of Things (IoT), more innovative transit service offerings aim to increase public transport ridership and reduce emissions or congestion within metropolitan areas. By providing these services through smartphone apps, the transit services also significantly increase user convenience, providing information on different human mobility offerings -- including public transport, ridesharing, and autonomous vehicles. Mobility-as-a-Service Market Development According to the latest market study by Juniper Research, Mobility-as-a-Service (MaaS) subscribers will generate $53 billion in revenue for MaaS platform providers by 2027 -- that's rising from $5.3 billion in 2021. Let's start with a basic definition. MaaS is the provision of multi-modal end-to-end travel services through single platforms, by which users can determine an optimal route and price. The study identified a monthly subscription model as key to incr

Upside for New 5G Network Transport Infrastructure

The global mobile communication sector is in the midst of a significant network infrastructure upgrade to support the introduction of new high-bandwidth and low-latency broadband service offerings.  Telecom service provider data centers have an important role in fifth-generation (5G) network deployments. Providers undergoing their transition to Stand-Alone (SA) 5G must understand the technical demands of telco data centers and the key enablers of those offerings. According to the latest worldwide market study by ABI Research, the major prerequisites of 5G and the emerging transport solutions would help operators position themselves to successfully capitalize on the new revenue opportunities from delivering differentiated 5G connectivity services. 5G Transport Network Market Development "The rise of the telco data center has a high degree of confluence with the requirements of SA 5G architectures. SA 5G and its increasing reliance on telco data centers can be attributed to the incr