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Worldwide Server Market Revenue Recap for 4Q17

Cloud service providers continue to drive computing server investment. Meanwhile, vendor revenue in the worldwide server market increased 26.4 percent year-over-year to $20.7 billion in the fourth quarter of 2017 (4Q17), according to the latest market study by International Data Corporation (IDC).

The server market continues to gain momentum, as traction for newer Purley- and EPYC-based offerings grows. While demand from cloud service providers has propped up overall market performance, other areas of the server market continue to show growth now as well.

Global Server Market Development

According to the IDC assessment, worldwide server shipments increased 10.8 percent year-over-year to 2.84 million units in 4Q17.

Volume server revenue increased by 21.9 percent to $15.8 billion, while midrange server revenue grew 48.5 percent to $1.9 billion.

High-end systems grew 41.1 percent to $2.9 billion, driven by IBM's z14 launch in the last quarter of 2017. However, IDC expects continued long-term secular declines in high-end system revenue, with short periods of growth related to major platform refreshes.

"Hyperscalers remained a central driver of volume demand in the fourth quarter with leaders such as Amazon, Facebook, and Google continuing their data center expansions and updates," said Sanjay Medvitz, senior research analyst at IDC.

ODMs continue to be the primary beneficiaries from hyperscale server demand. Some OEMs are also finding growth in this area, but the competitive dynamic of this market has also driven many OEMs such as HPE to focus on the enterprise.

Two key points to consider regarding new growth: IBM captured the third market position at 13 percent share with revenue growing 50.3 percent year-over-year to $2.7 billion. The ODM Direct group of vendors grew revenue by 48.1 percent to $4.2 billion.

Outlook for Geographic Growth Trends

On a geographic basis, Canada was the fastest growing region in 4Q17 with 69.7 percent year-over-year growth. The United States grew 29.6 percent, Europe, the Middle East and Africa (EMEA) grew 17.4 percent, and Latin America declined 5 percent.

Asia-Pacific (excluding Japan and China) grew 38.2 percent, China grew 33.8 percent, and Japan grew 4.3 percent. The outlook for market growth in 2018 is equally encouraging.

That being said, there's another key trend that's noteworthy. Demand for x86 servers increased 24.7 percent in 4Q17 with $17.5 billion in revenues. However, non-x86 servers also grew by 36.4 percent year-over-year to $3.2 billion.

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