FRAMINGHAM, Mass.--(BUSINESS WIRE)--According to the International Data Corporation (IDC) Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market decreased -3.7% year over year to $12.1 billion in the third quarter of 2013 (3Q13). This was the third consecutive quarter of year-over-year revenue decline, as server market demand remained soft ahead of a forthcoming refresh cycle, which is expected to emerge in early 2014. After increasing modestly in 2Q13, server unit shipments were flat year over year in 3Q13 with 2.3 million units shipped worldwide.
On a year-over-year basis, volume systems experienced 3.5% revenue growth. At the same time, demand for midrange and high-end systems experienced year-over-year revenue declines of -17.8% and -22.5% respectively in 3Q13. The midrange and high-end segments were impacted by difficult year-over-year compares and continued weakness in Unix demand while volume demand was helped by solid x86 server demand.
"Worldwide server revenue declined in all major geographic regions including Americas, EMEA, and Asia/Pacific in the third quarter. The market was impacted by a steady transition from 2nd Platform to 3rd Platform workload demand coupled with particularly weak sales of Unix servers, which served to further dampen the market," said Matt Eastwood, Group Vice President and General Manager, Enterprise Platforms at IDC. "2nd Platform workloads continue to represent a healthy consolidation opportunity across the market, driving solid demand for integrated systems. At the same time, 3rd Platform applications are shifting more and more server demand into cloud service provider datacenters, which is opening up new market opportunity for both ODMs and Chinese OEMs."
Overall Server Market Standings, by Vendor
HP regained the number 1 position in the worldwide server market with 28.1% factory revenue share in 3Q13. HP experienced a 1.5% year-over-year increase in factory revenue and gained 1.5 points of revenue share on improved demand for x86-based ProLiant servers in the quarter. IBM held the number 2 position in the market with 23.4% factory revenue share following a -19.4% year-over-year decline in factory revenue resulting in a loss of 4.5 points of factory revenue share in the quarter on soft demand for System x and Power Systems. Dell maintained third place with 16.2% factory revenue market share in 3Q13. Dell's factory revenue decreased -6.0% compared to 3Q12 losing 0.4 points of factory revenue share. Cisco and Oracle ended the quarter in a statistical tie for the number 4 market position with 5.0% and 4.1% factory revenue share respectively.
Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, Second Quarter of 2013
(Revenues are in Millions)
|Vendor||3Q13 Revenue||3Q13 Market Share||3Q12 Revenue||3Q12 Market Share||3Q13/3Q12 Revenue Growth|
Source: IDC Worldwide Quarterly Server Tracker, December 2013.
In addition to the table above, an interactive graphic showing the worldwide server shipments over the previous five quarters is available here. Instructions on how to embed this graphic into online news articles and social media can be found by viewing this press release on IDC.com.
Top Server Market Findings
- IBM's System z mainframe running z/OS experienced its fourth consecutive quarter of growth, increasing revenue 6.3% year over year to $827 million, representing 6.8% of all server revenue in 3Q13.
- Linux server demand continued to be positively impacted by cloud infrastructure deployments, as hardware revenue increased at 5.6% year over year to $3.4 billion in 3Q13. Linux servers now represent 28.0% of all server revenue, up 2.5 points when compared with the third quarter of 2012.
- Microsoft Windows server demand was down -1.3% year over year in 3Q13 with quarterly server hardware revenue totaling $6.1 billion representing 50.3% of overall quarterly factory revenue, up 1.2 points over the prior year's quarter.
- Unix servers experienced a revenue decline of -31.3% year over year to $1.3 billion representing 11.1% of quarterly server revenue for the quarter. This was the lowest quarterly Unix server revenue ever reported by IDC.
Introducing ODM Direct Servers
In response to evolving market demand within large scale, Web 2.0, and cloud hosting environments, Original Design Manfucturers (ODMs), such as Quanta Computer, Wistron Group/Wiwynn, Inventec Corporation, Compal Electronics, etc., are selling both complete systems and partial sub systems -- where final assembly is completed in the channel by integrators – into the market. Complete ODM Direct systems were previously captured in the IDC Worldwide Quarterly Server Tracker as a component of "Others" while partial sub system assemblies, frequently referred to as "self-built" servers, were not counted in the Tracker at all. IDC is now aggregating these server shipments under a new vendor category called "ODM Direct" with restated market data going back to Q1 2008.
ODM Direct server demand grew 45.2% year over year in 3Q13 to $783 million as unit shipments increased 30.7% to 325,685 servers. ODM Direct servers now represent 6.5% of all server revenue and 14.4% of all server shipments. 79.6% of all ODM Direct server revenue was generated in the U.S. in the quarter primarily through sales to Google, Amazon, Facebook and Rackspace.
"Each year, ODM Direct growth is accelerating as large, established hyperscale customers begin new expansion phases of their infrastructure footprints, and as the customer base for ODMs continues to broaden," said Kuba Stolarski, Research Manager, Enterprise Servers. "Capturing a majority of hyperscale demand for homogeneous environments, ODMs are well positioned for continued 3rd Platform infrastructure growth."
x86 Industry Standard Server Market Dynamics
Demand for x86 servers continued to improve in 3Q13, with revenues growing 2.8% in the quarter to $9.5 billion worldwide with unit shipment growth flat at 2.2 million servers. HP led the market with 32.3% revenue share based on 7.8% revenue growth while gaining 1.5 points of share when compared to 3Q12. Dell retained second place, securing 20.6% revenue share following a -6.0% year-over-year revenue decline while losing 1.9 points of share when compared with the third quarter of 2012. IBM rounded out the top three x86 server positions, holding 12.7% revenue share following a -17.6% year-over-year factory revenue decline.
Modular Form Factor Results
There are two types of modular form factors, each with a distinct use case. Blade servers, which are highly leveraged in enterprise's virtualized environments, grew 7.7% year over year to $2.3 billion. Blades now account for 18.7% of total server revenue. HP maintained the number 1 spot in the blade server market in 3Q13 with 43.6% revenue share; Cisco and IBM held the second and third position in the blade market with 20.4% and 18.3% revenue share, respectively.
Density Optimized servers, utilized by large heterogeneous datacenters, also experienced solid demand in 3Q13. Revenue grew 13.1% year over year in 3Q13 to $853 million as unit shipments increased 0.6% to just over 260,000 servers. Density Optimized servers now represent 7.1% of all server revenue and 11.9% of all server shipments. HP moved into the number 1 spot in the Density Optimized segment and Dell held the number 2 position in 3Q13 with 30.7% and 25.0% revenue share respectively.
"Blades continue to gain adoption with customers, as they are the foundation for many vendors' integrated systems," said Jed Scaramella, IDC Research Director, Servers. "Integrated systems combine server, storage, and networking to enable IT organizations to simplify their IT environments and accelerate time to deploy new IT services. The journey to convergence and integrated systems begins with a bladed ecosystem."
IDC's Server Taxonomy
IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers, midrange servers and high-end servers. The revenue data presented in this release is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments.
IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture. For more information, please contact Hoang Nguyen at 508-935-4718 or email@example.com.
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