Server revenues grow 6.2%, shipments 8.4% in 2015

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For an update of this data please click here. Having detailed the market development of each of the client devices over the last few weeks, it’s time to turn to the datacentre. Servers are at the heart of enterprise computing and succeeded in growing both in units (8.4%) to 23.3m and revenue (6.2%) to $76.5b. This is the firs annual growth we’ve seen since 2011 – a welcome sign for the industry as a whole. I’m going to look at market shares, operating systems and virtualisation in this post.

HP was the clear market leader in 2015 with an 18.6% share: it will be interesting to see if its decision to split HP Enterprise off from HP Inc. will help it consolidate its position in 2016. Dell in second place held a 14.8% share – double that of IBM in third with 7.1%. It will be interesting to see how Dell’s business develops as it merges with EMC n 2016. IBM – now exclusively a non-x86 server vendor – will need to demonstrate the success of its Linux strategy, which currently is doing better in the z Series business than in the Power series one. Lenovo and Cisco were equal fourth with a 4.2% share each. Lenovo has made a number of job cuts in the System x business, which has had disappointing results up until now: its lower-cost Think Server line has been doing better – especially in Asia. Cisco’s business is exclusively tied to its UCS business: it will need to adjust its strategy as EMC and Dell merge and its upstream partnering runs out of steam. Huawei was in sixth position with a 3.4% share, overtaking Oracle – now in seventh with a 2.5% share. Oracle should improve its position in 2016  with the introduction of its Sparc 7 processors.

Table – server vendor market shares 2015 – revenue ($US billion) unit shipments and installed base

Revenue ($b) Share % Unit (m) Share % Base (m) Share
HP $14.19 18.6%                    4.51 19.3%                  14.95 20.7%
Dell $11.30 14.8%                    4.52 19.4%                  14.63 20.3%
IBM $5.45 7.1%                    0.05 0.2%                    2.18 3.0%
Lenovo $3.23 4.2%                    1.29 5.5%                    2.01 2.8%
Cisco $3.23 4.2%                    0.39 1.7%                    0.96 1.3%
Huawei $2.62 3.4%                   0.88 3.8%                    1.83 2.5%
Oracle $1.89 2.5%                    0.19 0.8%                    0.73 1.0%
Other $34.55 45.2%                   11.50 49.3%                  34.95 48.4%
Total $76.46 100.0%  23.34 100.0%                  72.23 100.0%

Source: ITCandor, 2016

Windows is by far the most important server operating system, accounting for 71.3% of all revenue n 2015. Linux has grown substantially over the years and was in second place – its 11.4% share was almost double that of Unix (HP-UX, AIX and Solaris) which had a meagre 5.9% stake. IBM’s z Series operating systems were in fourth position with a 3.4% share.

It may be a surprise to many that the majority of servers sold in 2015 (59.7% of revenue) were ‘physical-only’ machines: this is due mainly to the sale of servers to Small and Medium Businesses (SMBs). The rest of servers ran hypervisors and hosted virtual machines. VMware accounted for 18.9% of the whole market and 46.8% of virtualised servers. It was followed by Microsoft’s Hyper-V (4.2% and 10.5% respectively), KVM – part of the Linux kernel of course – and Xen.

virtualDespite the fact that the majority servers shipped are physical-only machines, there are many more applications running on virtual machines. The Figure shows the quarterly shipments of the two types of server and an estimate of the number of virtual machines running on the virtualised ones. In 2015 I estimate that there were 4.2m physical-only and 2.3m virtualised running 9.3m virtual machines shipped.

Virtualisation is more advanced in the server market than in the storage or network areas. The standardisation of the market on x86 processors has established a firm basis for the development of the ‘software defined’ datacentre. However the development of Docker and container approaches goes beyond the hypervisor market and will disrupt the market considerably in 2016.

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