The server market grew by 6.8% to reach $97 billion in 2022; unit shipments were up 5.4% at 29 million and the installed base grew by 2.0% to reach 87 million at the end of the year. In this post I’ll review what happened, why and what that means for the future.Servers are multi-user computer systems used to run (typically) corporate applications. They come in many different sizes and configurations. For a modern way of classifying them see my post from 2021. The deployment of physical servers by companies and corporations has been adversely affected by the massive growth of cloud computing over the last decade, since it allows many to run server workloads without having to install, run and manage them ‘on premise’. Although cloud companies themselves host their IaaS, PaaS and SaaS services on servers, many are self-built and (thereby) not counted with the ‘branded’ machines that I asses in this post.
Between 2005 and 2022 server spending has been strongest and grown strongly in the Americas 9see my Figure above). Spending in Asia Pacific has grown strongly since the Credit Crunch in 2008-9, and overtook that in EMEA in 2012. Spending in EMEA, by comparison, has failed to grow – its level in 2022 was lower than in the period between 2005 and 2008.
Dell EMC was the leader of the server market in revenue (19.3%), shipments (19.4%) and installed base (16.8%) in 2022. HPE was the firm second runner with 13.0%, 13.1% and 9.3% shares respectively. In revenues these two were followed by Supermicro in third, Chinese vendors Inspur, Lenovo and Huawei in positions four to six and IBM in seventh.
There were some common movements by the top suppliers during 2022. In particular:
- Dell, Lenovo, Inspur and Supermicro each announced AMD EPYC-based servers in November, following HPE’s move in 2021.
- In June HPE announced new servers based on ARM chips and Inspur announced its adoption of the ARM SystemReady certification program; Supermicro had already announced its adoption of ARM processors in December 2021.
- All vendors are involved with the development of Edge server computing and most with the opening up of telecoms systems through private 5G deployments.
- Most vendors continue to support the use of NVIDIA GPUs for super compiting applications.
Most of these trends are challenges to the established leaders in server components – alternatives to Intel processors, challenges to Huawei, Nokia and Ericsson in telecoms equipment and occasionally even the use of non-NVIDIA GPUs. I expect these to continue until eventually quantum computing comes of age and disturbs everything.
I show the long-term trends in revenues from each of the leading server supplier in my Figure above. It demostrates the rise and rise of Dell, which overtook HPE as the largest supplier in 2017, the fall of IBM’s revenues from 2012 onwards, largely based on its decision to offload its x86-based server line to Lenovo, the growth of the Chinese vendors Huawei, Lenovo and Inspur (which has been curtailed somewhat by US-government sanctions in recent years) and the continuous rise of Supermicro, who’s modular systems have been popular with those public cloud providers who do not design and build their own servers.
The majority of serve computing is now done in virtual machines (applications run on multiple operating systems implemented on a single server). My Figure above shows the annual shipment of physical-only (i.e. non-virtualized) and virtualized servers (complete with an estimate of the number of virtual machines running on them). In more recent years there has also been a strong increase in the use of containers – typically Docker-based, although I haven’t yet found a way of measuring these. Despite the revolution in virtualized servers, server machines and container-based server applications, physical-only servers which run aplications on top of a single operating system still accounted for 56% of all shipments in 2022.
Leaving virtual machines aside, I show the trends in spending on servers by their virtualisation status in my Figure above – split by processor (x86 and other) and whether they are virtualised or not.
Over the next few years we’ll see that:
- The number and value of single non-virtualised servers will remain stable,
- There will be a growing number and value of virtualised x86 servers in the mix,
- Linux will grow as an operating system without ever challenging the dominance of Microsoft Windows,
- NVIDIA’s GPUs will continue to be used for scientific and high performance computing, although other vendors will challenge NVIDIA’s dominance,
- AMD processors will continue to grow as a proportion of the x86 server market without seriously challenging Intel’s dominance and
- ARM chips will continue to be used in server designs (primarily by HPE) without challenging the dominance of x86 types.
I don’t expect the sales of servers to follow PCs into significant decline in 2023. There will be a moderate expansion of the market as branded servers are deployed in the open core and edge parts of private 5G solutions in 2023 and beyond. Eventually – in five to ten years time – there will be major market disruption as quantum compting becomes a commercial reality.