Skip to main content

Why Hyperscale Cloud Providers Lead the Server Market

IT Vendor revenue in the worldwide server market increased 19.9 percent year-over-year to reach $17 billion in the third quarter of 2017 (3Q17), according to the latest market study by International Data Corporation (IDC).

While demand from cloud computing service providers has driven overall market performance in the past, other areas of the server market are beginning to show growth. Worldwide server shipments increased 11.1 percent year-over-year to 2.67 million units in 3Q17.

Server Systems Market Development

Volume server revenue increased by 19.3 percent to $14.2 billion, while midrange server revenue grew 26.9 percent to $1.4 billion.

High-end systems grew 19.4 percent to $1.3 billion, benefiting from the IBM z14 launch this quarter. That said, IDC expects continued long-term secular declines in high-end system revenue, with short periods of growth related to major platform refreshes.

"Hyperscalers continued driving volume demand in the third quarter, with Amazon again leading the charge, as Google and Facebook also began ramping up their server deployments again," said Kuba Stolarski, research director at IDC.

While Original Design Manufacturers (ODMs) have largely been the beneficiaries of hyperscaler server demand, some OEMs have now begun to experience significant growth related to the enterprise segment.

Dell grew its server business by 37.9 percent, relying on the strong synergy between its server team and the storage team incorporated from the EMC acquisition. HPE has been pivoting away from hyperscaler business and focusing on the enterprise, hurting year-over-year comparisons in the short term, but showing strength in the enterprise.

China has become a strong market for enterprise growth, as evidenced by Dell growing 42.3 percent year-over-year to $433 million, and HPE/New H3C Group growing 49.6 percent to $421 million. In addition, IBM has demonstrated that the enterprise still has space for non-x86 systems, growing the newly refreshed system z business by 63.8 percent year-over-year to $673 million.

HPE/New H3C Group remained first in the worldwide server market with 19.5 percent market share in 3Q17, as revenue decreased 1.1 percent year-over-year to $3.3 billion. HPE's share and year-over-year growth rate includes revenues from the H3C joint venture in China that began in May of 2016; thus, the reported HPE/New H3C Group combines server revenue for both companies globally.

Dell maintained the second position in the worldwide server market with 18.1 percent of vendor revenue for the quarter and 37.9 percent year-over-year growth to $3.1 billion. IBM and Cisco were statistically tied for the third market position.

IBM had 6.4 percent share, with revenue growing 26.5 percent year-over-year to $1.1 billion. Cisco had 5.8 percent share, with revenue increasing 6.9 percent to $992 million.

Lenovo was ranked fifth with 5.1 percent share and revenue declining 12.6 percent to $861 million. The ODM Direct group of vendors grew revenue by 45.3 percent to $4.1 billion. HPE and Dell were in a statistical tie for first place in unit share, each with 18.8 percent.

Popular posts from this blog

Artificial Intelligence Growth at an Inflection Point

Business technology investment no longer follows a predictable path to growth. The global venture capital (VC) investment in artificial intelligence (AI) was close to its peak in 2021 reaching $22.3 billion, according to the latest worldwide market study by ABI Research. This is just $400 million shy of the historical high of $22.7 billion recorded in 2019. Compared to the $15 billion recorded in 2020, the market made a remarkable recovery, with a 48.5 percent year-on-year growth. Will the future AI marketplace return to stable growth, or will it remain volatile? Artificial Intelligence Market Development "COVID-19 greatly accelerated the speed of digital transformation within the enterprise. Businesses are looking for solutions to work processes automation, customer care, due diligence, transcription and translation, and sales and marketing enablement tools," said Lian Jye Su, research director at ABI Research . At the same time, COVID-19 led to the Great Resignation of 2021

How a Digital-First CEO Leads Transformation

Some leaders reject the notion that "wait and see" is the best response to disruptive change. Savvy senior executives are already driving digital business transformation throughout their organization in an effort to gain a bold strategic advantage. According to the latest market study by International Data Corp (IDC), Digital-First CEOs plan to drive at least half of their income from digital business products, services, and experiences by 2027 -- that's ahead of the market average of 39 percent. Driven by their response to the COVID-19 pandemic, these business leaders have changed how they think about the relationship between business and technology, and how they approach the next digital transformation era -- from scaling digital technology to guiding a viable digital business. Digital Business Market Development IDC defines digital business as value creation based on technology, which entails: 1) Automated customer-facing processes and internal operations; 2) Provision

Digital Solutions for Industrial & Manufacturing Firms

Executive leaders of fast-moving consumer goods (FMCG) are seeking guidance on how to apply new business technology in their manufacturing operations. CIOs and CTOs are tasked with gaining insight into the best solutions for digital transformation. ABI Research evaluated the impact politics, regulation, the economy, supply chain, ESG, and technology are having on FMCG, pharma, producers of steel, chemicals, pulp and paper -- as well as the mining and oil & gas sectors. Digital Transformation Market Development "Our assessment found that the FMCG sector is under pressure from all sides," says Michael Larner, industrial & manufacturing research director at ABI Research . Securing raw materials is challenging considering lockdowns in China and limited grain supplies from Ukraine. Supply shocks are raising input costs, and operating costs are rising with higher energy costs coupled with the pressure to pay higher wages and work sustainably. "We all hoped that with th