According to the International Data Corporation (IDC) Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market decreased -6.2% year over year to $11.9 billion in the second quarter of 2013 (2Q13). This was the second consecutive quarter of year-over-year revenue decline, as server market demand continued to soften in most geographic regions. Server unit shipments decreased -1.2% year over year in 2Q13 to 2.0 million units, the third consecutive quarter where year-over-year server shipments have declined.
On a year-over-year basis, volume systems experienced a -2.4% revenue decline. At the same time, demand for midrange and high-end systems experienced year-over-year revenue declines of -22.3% and -9.5% respectively in 2Q13. All three segments were impacted by relatively difficult year-over-year compares combined with transitions in the technology refresh cycles.
"Mainstream SMB and enterprise server customers around the world continue to focus on consolidation, virtualization, and migration initiatives aimed at increasing efficiency and lowering datacenter infrastructure costs. At the same time, challenging economic conditions are dampening demand for new IT projects necessary to grow the server market globally," said Matt Eastwood, Group Vice President and General Manager, Enterprise Platforms at IDC. "It is clear that the competitive dynamics in the server market remain fierce as the leading server vendors work to offset weak demand for generally higher margin Unix and blade servers with lower margin rack and density optimized servers."
Overall Server Market Standings by Vendor
IBM held the number one position in the worldwide server market with 27.9% factory revenue share in 2Q13. IBM experienced a -10.0% year-over-year decline in factory revenue losing 1.2 points of share in the quarter on soft demand for System x and Power Systems.
HP held the number two position in the market with 25.9% factory revenue share following a -17.5% year-over-year decline in factory revenue resulting in a loss of 3.6 points of factory revenue share. HP experienced disappointing demand for x86-based ProLiant servers coupled with continued declines in HP Integrity server demand in the quarter.
Dell maintained third place with 18.8% factory revenue market share in 2Q13. Dell's factory revenue increased 10.3% compared to 2Q12, helping Dell to gain 2.8 points of factory revenue share. Dell now holds its highest-ever server market share in any quarter.
Oracle maintained the number four position with 6.0% factory revenue share; Oracle's 2Q13 factory revenue decreased -5.7% compared to 2Q12.
Cisco ended the quarter in the number five market position with 4.5% factory revenue share following 42.6% year-over-year revenue growth. With its highest ever market share, Cisco now holds sole possession of fifth place in the server market, breaking last quarter's statistical tie with Fujitsu.
Source: IDC Worldwide Quarterly Server Tracker, August 2013.
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x86 Server Market Dynamics
Demand for x86 servers weakened in 2Q13, with revenues declining -1.3% in the quarter to $8.7 billion worldwide as unit shipments were relatively flat (-0.1%) at 1.9 million servers. This was the second consecutive quarter of year-over-year factory revenue decline for the x86 server segment. HP led the market with 31.3% revenue share despite a -14.8% revenue decline. HP lost 5.0 points of market share when compared to 2Q12. Dell retained second place, increasing x86 factory server revenue 10.3% year-over-year and securing 25.7% of revenue share while gaining 2.7 points of share when compared with the second quarter of 2012. IBM rounded out the top three positions, holding 12.8% revenue share following a -10.8% year-over-year revenue decline.
Modular Form Factor Results
There are two types of modular form factors, each with a distinct use case. Blade servers, which are highly leveraged in enterprises' virtualized environments, declined -6.2% year over year to $2.0 billion. Blades now account for 16.9% of total server revenue. HP maintained the number one spot in the blade server market in 2Q13 with 44.8% revenue share; Cisco and IBM held the second and third positions in the blade market with 19.6% and 17.2% revenue share, respectively.
Density Optimized servers, utilized by large hyperscale datacenters, experienced very strong demand in 2Q13. Revenue grew 26.6% year over year in 2Q13 to $735 million as unit shipments increased 13.8% to just under 200,000 servers. Density Optimized servers now represent 6.2% of all server revenue and 10.0% of all server shipments. Dell maintained the number one spot in the Density Optimized segment in 2Q13 with 60.5% revenue share.
"Even though the overall blade market was down, several of the top vendors experienced positive growth within their converged and integrated system businesses. IDC finds more enterprises adopting integrated systems to increase the agility and efficiency of their IT infrastructure," said Jed Scaramella, research manager, Enterprise Servers at IDC. "Density Optimized servers achieved the highest growth of any segment in the server market. The datacenter build-outs by service providers are driving growth in the industry and represent a strategic opportunity for OEMs, while at the same time IDC is seeing new participants enter the market targeting the hyperscale datacenter segment."
Other Server Market Findings
- IBM's System z mainframe running z/OS experienced its third consecutive quarter of growth, increasing revenue 9.9% year over year to $1.2 billion, representing 9.8% of all server revenue in 2Q13.
- Linux server demand continued to be positively impacted by cloud infrastructure deployments, as hardware revenue increased 1.5% year over year to $2.8 billion in 2Q13. Linux servers now represent 23.2% of all server revenue, up 1.8 points when compared with the second quarter of 2012.
- Microsoft Windows server demand was down -5.1% year over year in 2Q13 with quarterly server hardware revenue totaling $5.8 billion representing 49.3% of overall quarterly factory revenue, up 0.5 points over the prior year's second quarter.
- Unix servers experienced a revenue decline of -21.0% year over year to $1.8 billion, representing 15.1% of server revenue for the quarter. This was the lowest quarterly Unix server revenue ever reported by IDC.
"The non-x86 server market is in the middle of a major transformation, as hardware platforms associated with Unix continue to look for a bottom in their secular decline, mainframes find new 3rd platform workloads, and the market prepares for new RISC-based system-on-a-chip architectures to enter," said Kuba Stolarski, Research Manager, Enterprise Servers at IDC. "As the lines between x86 and non-x86 workloads continue to blur, customers will find compelling cases outside of x86 for hyperscale and scale-up solutions for their analytics, cloud, mobile, and social platforms."
IDC's Server Taxonomy
IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers, midrange servers and high-end servers. The revenue data presented in this release is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments.
IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture. For more information, please contact Hoang Nguyen at 508-935-4718 or hnguyen@idc.com.
About IDC Trackers
IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad.
On a year-over-year basis, volume systems experienced a -2.4% revenue decline. At the same time, demand for midrange and high-end systems experienced year-over-year revenue declines of -22.3% and -9.5% respectively in 2Q13. All three segments were impacted by relatively difficult year-over-year compares combined with transitions in the technology refresh cycles.
"Mainstream SMB and enterprise server customers around the world continue to focus on consolidation, virtualization, and migration initiatives aimed at increasing efficiency and lowering datacenter infrastructure costs. At the same time, challenging economic conditions are dampening demand for new IT projects necessary to grow the server market globally," said Matt Eastwood, Group Vice President and General Manager, Enterprise Platforms at IDC. "It is clear that the competitive dynamics in the server market remain fierce as the leading server vendors work to offset weak demand for generally higher margin Unix and blade servers with lower margin rack and density optimized servers."
Overall Server Market Standings by Vendor
IBM held the number one position in the worldwide server market with 27.9% factory revenue share in 2Q13. IBM experienced a -10.0% year-over-year decline in factory revenue losing 1.2 points of share in the quarter on soft demand for System x and Power Systems.
HP held the number two position in the market with 25.9% factory revenue share following a -17.5% year-over-year decline in factory revenue resulting in a loss of 3.6 points of factory revenue share. HP experienced disappointing demand for x86-based ProLiant servers coupled with continued declines in HP Integrity server demand in the quarter.
Dell maintained third place with 18.8% factory revenue market share in 2Q13. Dell's factory revenue increased 10.3% compared to 2Q12, helping Dell to gain 2.8 points of factory revenue share. Dell now holds its highest-ever server market share in any quarter.
Oracle maintained the number four position with 6.0% factory revenue share; Oracle's 2Q13 factory revenue decreased -5.7% compared to 2Q12.
Cisco ended the quarter in the number five market position with 4.5% factory revenue share following 42.6% year-over-year revenue growth. With its highest ever market share, Cisco now holds sole possession of fifth place in the server market, breaking last quarter's statistical tie with Fujitsu.
Source: IDC Worldwide Quarterly Server Tracker, August 2013.
This chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic are available by clicking here.
x86 Server Market Dynamics
Demand for x86 servers weakened in 2Q13, with revenues declining -1.3% in the quarter to $8.7 billion worldwide as unit shipments were relatively flat (-0.1%) at 1.9 million servers. This was the second consecutive quarter of year-over-year factory revenue decline for the x86 server segment. HP led the market with 31.3% revenue share despite a -14.8% revenue decline. HP lost 5.0 points of market share when compared to 2Q12. Dell retained second place, increasing x86 factory server revenue 10.3% year-over-year and securing 25.7% of revenue share while gaining 2.7 points of share when compared with the second quarter of 2012. IBM rounded out the top three positions, holding 12.8% revenue share following a -10.8% year-over-year revenue decline.
Modular Form Factor Results
There are two types of modular form factors, each with a distinct use case. Blade servers, which are highly leveraged in enterprises' virtualized environments, declined -6.2% year over year to $2.0 billion. Blades now account for 16.9% of total server revenue. HP maintained the number one spot in the blade server market in 2Q13 with 44.8% revenue share; Cisco and IBM held the second and third positions in the blade market with 19.6% and 17.2% revenue share, respectively.
Density Optimized servers, utilized by large hyperscale datacenters, experienced very strong demand in 2Q13. Revenue grew 26.6% year over year in 2Q13 to $735 million as unit shipments increased 13.8% to just under 200,000 servers. Density Optimized servers now represent 6.2% of all server revenue and 10.0% of all server shipments. Dell maintained the number one spot in the Density Optimized segment in 2Q13 with 60.5% revenue share.
"Even though the overall blade market was down, several of the top vendors experienced positive growth within their converged and integrated system businesses. IDC finds more enterprises adopting integrated systems to increase the agility and efficiency of their IT infrastructure," said Jed Scaramella, research manager, Enterprise Servers at IDC. "Density Optimized servers achieved the highest growth of any segment in the server market. The datacenter build-outs by service providers are driving growth in the industry and represent a strategic opportunity for OEMs, while at the same time IDC is seeing new participants enter the market targeting the hyperscale datacenter segment."
Other Server Market Findings
- IBM's System z mainframe running z/OS experienced its third consecutive quarter of growth, increasing revenue 9.9% year over year to $1.2 billion, representing 9.8% of all server revenue in 2Q13.
- Linux server demand continued to be positively impacted by cloud infrastructure deployments, as hardware revenue increased 1.5% year over year to $2.8 billion in 2Q13. Linux servers now represent 23.2% of all server revenue, up 1.8 points when compared with the second quarter of 2012.
- Microsoft Windows server demand was down -5.1% year over year in 2Q13 with quarterly server hardware revenue totaling $5.8 billion representing 49.3% of overall quarterly factory revenue, up 0.5 points over the prior year's second quarter.
- Unix servers experienced a revenue decline of -21.0% year over year to $1.8 billion, representing 15.1% of server revenue for the quarter. This was the lowest quarterly Unix server revenue ever reported by IDC.
"The non-x86 server market is in the middle of a major transformation, as hardware platforms associated with Unix continue to look for a bottom in their secular decline, mainframes find new 3rd platform workloads, and the market prepares for new RISC-based system-on-a-chip architectures to enter," said Kuba Stolarski, Research Manager, Enterprise Servers at IDC. "As the lines between x86 and non-x86 workloads continue to blur, customers will find compelling cases outside of x86 for hyperscale and scale-up solutions for their analytics, cloud, mobile, and social platforms."
IDC's Server Taxonomy
IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers, midrange servers and high-end servers. The revenue data presented in this release is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments.
IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture. For more information, please contact Hoang Nguyen at 508-935-4718 or hnguyen@idc.com.
About IDC Trackers
IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad.
