The Cloud

Worldwide Server Sales Drop 0.4% in Q2

An IDC survey finds the decline of the high-end segment continued but volume system growth is a positive sign for the future.
Matthew HellerSeptember 15, 2016

Global server market revenue fell in the second quarter, with three of the top five vendors experiencing sales drops amid the continuing decline of the high-end segment, according to International Data Corp.

The research firm said in its latest Worldwide Quarterly Server Tracker that vendor revenue declined 0.4% year over year to $13.4 billion in the second quarter. High-end systems experienced a decline of 31.4% to $1.6 billion.

“Overall server market growth has recently slowed in part due to a pause in hyperscale data-center expansion and is feeling the continued drag from high-end server sale declines,” IDC said.

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But worldwide server shipments increased 2.6% to 2.4 million units while volume system revenue increased 5.3% and midrange system demand increased 12.7% to $10.6 billion and $1.3 billion, respectively.

“The server market is progressing exactly as expected, with close to flat growth in the second quarter, following a difficult first quarter, but growth in volume servers is still healthy, which is a good sign for the market moving forward,” Kuba Stolarski, research director for computing platforms at IDC, said in a news release.

Among individual vendors, Hewlett Packard Enterprise remained the market leader with a 25.4% share but its revenue fell 0.3% to $3.4 billion and Dell moved into the top spot for shipments, with an 8.9% increase. Dell’s revenue rose 10% to $2.6 billion.

No. 3 IBM’s revenue decreased 34.0% to $1.3 billion as both its Power and System Z mainframes experienced double-digit declines. Lenovo and Cisco tied for 4th place.

For the second half of 2016, IDC’s expects market growth will be spurred by cloud data-center buildouts from key hyperscalers. “Looking out further, the market will be impacted by digital transformation initiatives, including the Internet of Things and cognitive computing, and by a continuing shift towards software-defined infrastructure,” Stolarski predicted.

According to numbers released by Gartner, worldwide server revenue fell 0.8% to $13.5 billion in the second quarter, while shipments, at more than 2.75 million units, increased 2%.