FRAMINGHAM, MA – Factory revenue in the worldwide server market increased 2.5% year-over-year to $12.6 billion in the second quarter of 2014, says the International Data Corp.
Server unit shipments improved 1.2% year-over-year to 2.2 million units in the quarter, as investments in hyperscale data center capacity were largely offset by consolidation, which continued to be a strategic focus for many large and small customers around the globe, according to IDC. Additionally, IDC continues to see signs of a server refresh cycle expected to lift the market going forward.
On a year-over-year basis, volume systems experienced 4.9% revenue growth. This was the fifth consecutive quarter that volume system demand increased year-over-year. Midrange systems also experienced growth of 11.6% compared to the second quarter of 2013, as technology refresh cycles began to positively impact the segment. Meanwhile, high-end enterprise systems experienced a year-over-year revenue decline of 9.8%, primarily due to difficult annual comparisons in the segment, says IDC.
"The server market is experiencing the beginning of a cyclical refresh cycle as systems deployed shortly after the financial crisis are retired and replaced. IDC expects this refresh cycle will continue well into 2015 and be further accelerated by Microsoft's announcement that it is ending support for Windows Server 2003, coupled with Intel's forthcoming release of the Grantley Xeon EP and a significant number of related server platform announcements," said Matt Eastwood, group vice president and general manager, Enterprise Platforms at IDC.
HP held the number one position in the worldwide server market, with 25.4% factory revenue share for the second quarter. HP's 4% revenue growth included improving demand for x86-based ProLiant servers and continued weakness in Itanium-based Integrity server revenue.
IBM held the number two spot with 23.6% share for the quarter, as factory revenue decreased 10.2% compared to the same period last year. Demand for IBM's power-based systems declined sharply year-over-year in advance of a significant technology refresh, says IDC.
Dell maintained the third position with 16.6% factory revenue market share, as factory revenue declined 6.5% year-over-year as Dell works to realign its PowerEdge server business with its solutions selling strategy.
Oracle and Cisco ended the quarter in a two-way statistical tie for the number four position, with 5.9% and 5.8% factory revenue share, respectively. Cisco's second-quarter factory revenue increased 35.4% compared to the same quarter of 2013, gaining 1.4 points of market share. Oracle's factory revenue was up 3.9% year-over-year.
Demand for x86 servers improved during the quarter, with revenues increasing 7.8% year-over-year to $9.8 billion worldwide, as unit shipments increased 1.5% to 2.2 million servers. HP led the market with 29.6% revenue share, based on 7.4% revenue growth over the same period in 2013.
Dell retained second place, securing 21.2% revenue share.
Non-x86 servers experienced a revenue decline of 12.8% year-over-year to $2.7 billion, representing 21.8% of quarterly server revenue. This was the twelfth consecutive quarter of revenue decline in the non-x86 server segment. IBM leads the segment with 69.1% revenue share, following a year-over-year revenue decrease of 13.9%.
Blade servers increased 7% year-over-year to $2.1 billion. Blades now account for 17% of total server revenue. HP maintained the number one spot in the blade server market, with 42.2% revenue share; Cisco and IBM held the second and third positions in the blade market with 25.2% and 13.7% revenue share, respectively.
Density-optimized servers had a difficult year-over-year comparison, due to several large deployments that occurred in the second quarter of 2013, says IDC. Revenue declined 7.6% to $768 million, as unit shipments decreased 16.1% to 216,314 servers. Density-optimized servers represent 6.1% of all server revenue and 9.7% of all server shipments.
Regionally, Asia/Pacific (excluding Japan) and Western Europe experienced the sharpest growth, with year-over-year revenue increases of 6.9% and 6%, respectively. China continued to exhibit significant growth with year-over-year revenue up 19.4% to $1.8 billion. The top 4 Chinese OEMs – Inspur, Huawei, Lenovo, and Sugon – all grew revenue on a year-over-year basis by more than 35%.