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

Digital Transformation Investment at $3.4 Trillion

Business technology leadership matters. Across the globe, more leaders have been pursuing bold Digital Transformation (DX) initiatives with the goal of creating new sources of business value through digital products, services, and experiences. As an additional benefit, the COVID-19 pandemic revealed that digital transformation efforts improve an organization's resilience against global market disruptions. Global DX investment is forecast to reach $3.4 trillion in 2026 with a five-year compound annual growth rate (CAGR) of 16.3 percent, according to the latest worldwide market study by International Data Corporation (IDC). Digital Transformation Market Development "Despite strong headwinds from global supply chain constraints, soaring inflation, political uncertainty, and an impending recession, investment in digital transformation is expected to remain robust," said Craig Simpson, senior research manager at IDC . The benefits of investing in DX technology -- including aut

Artificial Intelligence for National Border Security

National border protection agencies are under pressure to provide the highest level of security in the face of growing threats, such as increasing illegal migration and international terrorism. Now, government agencies are embracing advanced border security technologies to aid in effectively and reliably securing national borders. These solutions look to detect and identify potential threats and prevent them from escalating to a point that may jeopardize security. Security Surveillance Market Development Traditional border security patrols and Closed-circuit Television (CCTV) surveillance systems aren't adequate protection, and agencies must increasingly deploy new solutions to stay ahead of criminals and other potential threats to ensure the safety of a country’s borders. According to the latest market study by Juniper Research, the value of the border security technology market will exceed $70 billion globally in 2027 -- that's rising from $48 billion in 2022. Growing by 47 p

Precision Medicine Spend to Reach $132.3 Billion

Precision Medicine uses molecular info to extract the optimum medical method from diagnostic protocols, by merging the impact of environmental and genetic factors. Data access is essential, with genetic metabolic and clinical data used to build a fuller picture of a patient's biology. Moreover, the primary aim of precision medicine is to design and optimize a pathway for diagnosis, therapeutic intervention, and prognosis, using large biological datasets. Personalized, evidence-based medicine uses stored health data, which includes patient diagnosis, laboratory work, insurance claims, and demographic information. The results enable healthcare providers to predict and prevent some illnesses. Precision Medicine Market Development According to the latest worldwide market study by Juniper Research, the total investment in precision medicine will reach $132.3 billion globally by 2027 -- that's increasing from only $35.7 billion in 2022. The significant market growth of 270 percent is