Server Market Revenue Jumps 6.3% in the Second Quarter

Server Market Revenue Jumps 6.3% in the Second Quarter

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According to IDC, vendor revenue in the worldwide server market increased 6.3% year over year to $15.7 billion in the second quarter of 2017 (2Q17). Overall server market growth rebounded after several slow quarters as much of the market had been waiting for availability of Intel's new Skylake processors.

While demand from cloud service providers propped up overall market performance, many other areas of the server market are still stagnant. Worldwide server shipments increased 1.9% year over year to 2.45 million units in 2Q17. Volume server revenue increased by 8.3% to $12.9 billion, while midrange server revenue grew 19.6% to $1.5 billion. Demand for high-end systems experienced a year-over-year revenue decline of 18.9% to $1.3 billion. IDC expects continued long-term secular declines in high-end system revenue.

"Hyperscalers as a group made a large deployment push in the second quarter led by Amazon, which alone accounted for more than 10% of server units shipped in the quarter," said Kuba Stolarski, research director, Computing Platforms at IDC. "As hyperscalers tend to lead the market on most architectural updates, we expect the rest of the market to catch up over the next several quarters. As the market cycles through this refresh, we are seeing changes in vendor portfolios with new modular system designs and a greater focus on accelerator technologies, as well as the continued evolution of the role of cloud services in corporate IT."

HPE/New H3C Group remained first in the worldwide server market with 21.3% market share in 2Q17, as revenue decreased 8.4% year over year to $3.3 billion. HPE's share and year-over-year growth rate includes revenues from the H3C joint venture in China that began in May of 2016; thus, the reported HPE/New H3C Group combines server revenue for both companies globally.

Dell maintained the second position with 17.7% of vendor revenue and 7.0% year-over-year growth to $2.8 billion. IBM and Cisco were statistically tied for the third market position. IBM had 6.6% share, with revenue declining 20.8% to $1.0 billion. Cisco had 5.6% share, with revenue increasing 1.7% to $875 million. Lenovo was ranked fifth with 5.3% share and revenue declining 13.9% to $834 million. The ODM Direct group of vendors grew revenue by 48.1% to $3.5 billion.

Top 5, Vendor Revenue, Market Share, and Growth, Second Quarter of 2017 (Revenues in Millions)

Company

2Q17 Revenue

2Q17 Market Share

2Q16 Revenue

2Q16 Market Share

2Q17/2Q16 Revenue Growth

1. HPE/New H3C Group

$3,348.5

21.3%

$3,654.4

24.7%

-8.4%

2. Dell

$2,776.2

17.7%

$2,594.2

17.6%

7.0%

3. IBM

$1,042.7

6.6%

$1,316.2

8.9%

-20.8%

3.Cisco

$874.9

5.6%

$860.3

5.8%

1.7%

5. Lenovo

$834.1

5.3%

$969.2

6.6%

-13.9%

ODM Direct

$3,545.3

22.6%

$2,393.7

16.2%

48.1%

Others

$3,294.9

21.0%

$2,990.3

20.2%

10.2%

Total

$15,716.6

100.0%

$14,778.2

100.0%

6.3%

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