Server Market Down 4% In Q3 2013 – A Better 2014 In Prospect

Server Market Highlights

  • Revenue declines 4% to $13.4B for the quarter
  • Shipments up 2% to 3.7M
  • 78% of server revenues were for x86-based products
  • Installed Base up 6% to 48.9M
  • For the year to the end of September revenues declined 2% to $56.2B
  • Shipments up 3% to 14.9M
  • HP maintains its lead
  • Dell increases its share – challenges IBM’s 2nd position

server share

HP Maintains Its Lead

The server market suffered a 3rd quarter of decline – dropping 4% to 13.4B, although unit shipments increased by 2% to 3.7 Million and the installed base by 6% to 48.9 Million. The Unix market declined by a staggering 21%, although IBM’s System z did well – growing by 6%. The x86 server market was static at $10.5 Billion.

For the year to the end of September HP maintained its leadership position – posting a 22.3% share overall, 26.7% in the x86 and 8.5% in the ‘Other server’ category with its NSK and Integrity Itanium-based products (see Figure). IBM was in second place with a 18.0% share due to its massive 57.6% share of the ‘Other server’ category with its System z and Power servers, which run AIX and i operating systems. Dell in 3rd position gained around half a percentage since our last assessment; its Proliant products are currently exclusively based on x86 processors.

server type

In-Memory Databases Could Slow The Decline Of Unix

The shift away from dedicated Unix machines was accelerated by the Credit Crunch and has continued through the downturn (see Figure). IBM, Oracle and HP have addressed the decline in a number of ways – by encouraging the use of Linux, including them in Integrated Systems, and/or offering a roadmap for migration to x86. The introduction of various in-memory databases will help to improve the prospects for Unix machines in 2014, although their success will have to be tremendous to halt the decline.

Lots Of Activity – Little Overall Growth

Beyond the server suppliers themselves the vendors have done well – Microsoft’s Servers and Tools division grew by 8% to $5.1 Billion, Intel’s Data Center Group grew 10% to $2.9 Billion and AMD’s overall business was also up – demonstrating a shift away from the brand owners towards the component and software suppliers.
The Web scale public Cloud companies (Google, Amazon, eBay, etc.) continue to build their own servers of course – adding a few million to the total each year, while Chinese suppliers like Inspur grow their businesses in emerging markets. The addition of microservers (AMD Sea Micro, HP Moonshot, etc.) could grow the market once we have the appropriate 64-bit chips and applications that work. Converged infrastructure and integrated system strategies are also increasing the sophistication of deployments and reducing the time spent in manual management activities.
However we’re not overly enthusiastic about the server market in 2014 – our forecast is that it will grow by around 1%: nevertheless these products remain – as always – at the heart of the IT industry.

7 Responses to “Server Market Down 4% In Q3 2013 – A Better 2014 In Prospect”

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  1. […] its market share: we place it in 7th position overall (with a 2.0% market share) and 4th in the x86 market (2.8%). It claims to have 28k customers for UCS and to be present in 75% of all Fortune 500 […]

  2. […] Intel’s Xeon E7 is its most powerful chip and as such will be used in scale up and integrated systems requiring the highest performance. We do not expect there to be as much fuss about product announcements as there were with the E5 back in 2012. Nevertheless IBM has stolen a march on its rivals by announcing new systems before the new chips themselves, which allows its users and prospects time to consider its many system-level enhancements. The modular design of the x3850 X6 including the concept of storage, I/O and compute ‘books’ as well as the ability to combine 2 together to make an 8 processor x3950 X6 demonstrate a smart design approach from IBM and this new chassis design should last many years as the basis of SAP HANA, DB2 BLU and Microsoft SQL in-memory systems. The Flex System x880 X6 will no doubt form a similar role within the PureSystems family, although we’ll have to wait until the end of January for the details. IBM’s focus in the x86 server market (as in its mainframe and Unix businesses) has been on large integrated systems, where it is the market leader. However these have not grown as rapidly as the low-priced blade and tower systems over the last few years. We believe that 2014 will see much more emphasis on in-memory and CIandIS servers. IBM has already made a strong play in the SAP HANA market, becoming the leading vendor. Its understanding of memory extensions – through its own FlashSystem, storage offerings and partnerships – give it a head-start in the high-end markets all of the other x86 server vendors will need to address this year. We’ll be covering developments closely over coming months of course. Further reading – see our sizing of the server market in Q3 2013 […]

  3. […] research: see our server market shares for Q3 2013 and our assessment of the latest System X6 […]

  4. […] on single-host servers, there is still a significant marketplace for x86 servers: according to IT Candor, over $46B in 2013. Although the server market suffered its third quarter of revenue decline, […]

  5. […] on single-host servers, there is still a significant marketplace for x86 servers: according to IT Candor, over $46B in 2013. Although the server market suffered its third quarter of revenue decline, […]

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