The year to June 2017 $76b server market primed for big growth

The server market is poised for growth following the introduction of new processors from Intel and AMD; however in Q2 revenues grew only 2.3% to $19.3b, units by 6.3% to 6.3m and the installed base by 2.4% to 75.1m. In the year to the end of June revenues declined by 1.9% to $75.7b, while unit shipments increased by 1.2% to 6.3m. The installed base growth was the same as for the quarter of course. My Figure shows the revenues of the 7 market leaders; it shows HP’s continued dominance of the market, Dell’s ever increasing growth (now enhanced by its acquisition of EMC) and IBM’s decline following its decision to offload its x86 business to Lenovo and to focus on cloud computing by acquiring SoftLayer. You’ll want to learn more about this important part of the ITC market.

Although users throughout the world decided decades ago that they preferred to use servers based on ‘standard’ x86 processors, it took software companies (most notably VMware) and Open Source developers to build tools to help those machines approach the functionality of mainframes and Unix servers by adding hypervisors and – now – containers to these machines. My Figure shows the installed base of servers on a quarterly basis by virtualisation status. The dotted line shows the number of virtual machines running on the virtualised servers, which now far exceeds the number of physical servers in the world. The shift in usage to include containers based on Open Source Docker developments is disrupting the new status quo, because you don’t need a hypervisor on your server to run containers. They are nothing new however as all major Unix and mainframe operating systems have offered containers for many years, even if they were described in terms such as ‘protecting the memory associated with multiple applications running in a logical partition of the operating system’.

This Figure shows a few of the many important dimensions of the server market, breaking the $75.7b revenues by vendor, operating system, virtualisation status and processor type. It shows:

  • HP’s leadership of the market being challenged by Dell. Its leadership isn’t as strong as Canon in peripherals , Cisco’s in enterprise networks, or apple’s in the mobile devices. It will be interesting to see how it wards off the inevitable rise of Dell EMC, especially in its rapidly growing vxrail and vxrack converged infrastructure business.
  • Windows is winning hands down in operating systems with a 72.9% market share. Linux usage has been growing slowly every year, achieving as 12.7% share for the year. Its share is stronger if we add ODM servers to the mix, where its various distributions are the operating systems of choice for most cloud service suppliers a and Web-scale data centers.
  • x86 processors held an 87.2% of the server marketplace. This demonstrates the dominance of Intel, which accounted for over 90% of the revenue in the year. AMD is an interesting alternative vendor, especially as it has announced a number of new processors this year. The excitement about the potential of using ARM chips in servers of a few years ago has died down, but has plenty of potential to change the nature of the server market – as does the IBM’s encouragement for others to use its Power processors through the creation of the Open Power Association, which will result in many new types of platform (especially from Chinese suppliers).
  • The majority of server spending in the year was for ‘physical only’ machines (i.e. those which do not run hypervisors). Of the virtualised machines (those that do) VMware retained its lead, which was 4 times the size of Microsoft’s Hyper-V and KVM (which is an inherent part of all Linux distributions).

These elements of the server market will continue to change of course as computing becomes more centralised. The introduction of new cloud-based and/or cloud-like applications by (mainly large) enterprises will shift the balance more towards Open Source components such as Linux, virtualisation (with or without hypervisors) and KVM within hypervisors. You need a rethink if you are a vendor for whom holding-hands of – and making things simpler for – enterprise customers is a major part of your strategy today.

Table – world server market shares – revenues ($USb), shipment units and installed base (millions) – year to the end of June 2017

Revenue ($b) Share % Unit (m) Share % Base (m) Share
HP $13.5 17.9%               4.5 18.7%          16.0 21.3%
Dell $11.6 15.3%              4.6 19.2%          15.7 20.9%
IBM $4.1 5.5%         0.038 0.2%             1.1 1.5%
Huawei $3.4 4.5%              1.2 5.0%           3.0 4.0%
Cisco $3.2 4.3%              0.4 1.8%            1.3 1.7%
Lenovo $2.8 3.7%              1.1 4.6%            3.2 4.3%
NEC $2.0 2.6%              0.6 2.4%            2.2 3.0%
Other $35.0 46.2%             11.6 48.1%        32.5 43.2%
Total $75.7 100.0%           24.2 100.0%         75.1 100.0%

Source: ITCandor, 2017

This is only a fraction of our statistics and analysis of the server market. Please contact me if you need more for your business plans or marketing activities. Please fill in your details below to download our server service flyer and order form.

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