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

How Savvy Pioneers Lead the Future of Work

Hybrid and fully remote work are inevitable in the Global Networked Economy where high-performance talent demands flexibility from employers. To enable these progressive work models, organizations are investing in a wide range of technologies to support more agile types of employment.  According to the latest worldwide market study by International Data Corporation (IDC), leading organizations will spend nearly $1 billion on the Future of Work (FoW) in 2023 -- that's an increase of 18.8 percent over 2022. Future of Work Market Development "Work models continue to evolve, but 37 percent of decision-makers in a recent global survey note that Remote and Hybrid work models will be an embedded part of accepted work practices, supported by a continued shift to the cloud, increasingly instrumented and interconnected physical workplaces, and intelligent digital workspaces," said Holly Muscolino, group vice president at IDC . According to the IDC assessment, organizations must mak

Human Resource Transformation Enabled by IT

Many senior executives are taking a proactive approach to digital business transformation in order to achieve their strategic goals. Delivering revenue growth and profitability is now imperative for every function, including Human Resources (HR). The top 3 priority HR technologies this year are skills management, learning experience platforms, and internal talent marketplaces, according to the latest worldwide market study by Gartner. "With a tumultuous global economy, HR technology leaders face a balancing act in 2023," said Sam Grinter, director at Gartner . "Leaders must anticipate greater levels of accountability and demand for measurable outcomes to justify new technology investments." HR Transformation Market Development Forty-four percent of HR leaders report driving better business outcomes is their number one strategic priority for HR technology transformation over the next three years. Growth in headcount and skills (26 percent) and cost optimization (17 p

Virtual Reality Market Set to Reach $100 Billion

Virtual Reality (VR) market growth is now finally coming to fruition. Thanks to current actions and market momentum, VR is approaching what can be considered critical mass. And, not a moment too soon. This growth momentum comes from new hardware and content releases, accelerating enterprise value recognition, and a significant metaverse wild card that could potentially lift adoption and usage. According to the latest worldwide market study by ABI Research, over 85 million VR Head Mounted Displays (HMDs) will be shipped in 2027 across consumer and enterprise segments, creating a $100 billion VR market that includes hardware, software, and services. Virtual Reality Market Development "Expectations have been high in VR for years, and even decades, without notable growth to show. That growth is finally coming over the next five years," said Eric Abbruzzese, research director at ABI Research . The barrier to entry is lower than ever, all while content performance and user experien