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
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.
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.