Worldwide Server Market Revenues Decrease 2.4% in First Quarter as Market Growth Slows in Face of Market Transitions, According

  Worldwide Server Market Revenues Decrease 2.4% in First Quarter as Market
  Growth Slows in Face of Market Transitions, According to IDC

Business Wire

FRAMINGHAM, Mass. -- May 31, 2012

According to the International Data Corporation (IDC) Worldwide Quarterly
Server Tracker, factory revenue in the worldwide server market decreased 2.4%
year over year to $11.8 billion in the first quarter of 2012 (1Q12). This is
the second consecutive quarter of year-over-year revenue decline, as the
server market faced difficult year-over-year compares in several market
segments. Server unit shipments increased 2.7% year over year in 1Q12 to 2.0
million units, which is the second highest quarterly total ever reported in
the first calendar quarter of any year.

On a year-over-year basis, volume systems experienced 2.1% revenue growth.
This was the ninth time in the previous ten quarters that volume system demand
improved year over year. At the same time, demand for midrange and high-end
systems experienced year-over-year revenue declines of 11.2% and 10.2%
respectively in 1Q12. The midrange and high-end were impacted by difficult
year-over-year compares combined with transitions in the technology refresh
cycles typical for these segments.

"The server market worked through a transitional period in the first quarter
of 2012 as suppliers prepared to introduce numerous critically important x86
server offerings. At the same time, difficult year-over-year compares helped
distort some results across other segments of the market," said Matt Eastwood,
group vice president and general manager, Enterprise Platforms at IDC.
"Regionally, Americas was flat year-over-year while EMEA experienced a sharp
double-digit decline in server spending. However, the larger concern for
server vendors was the sharply lower revenue growth in Asia/Pacific, including
China. China is one of only three countries that regularly spend more than $1
billion quarterly on servers and any sustained reduction in revenue growth
would be troubling for the market."

Overall Server Market Standings, by Vendor

HP held the number 1 position in the worldwide server market with 29.3%
factory revenue share for 1Q12. HP's 9.8% revenue decline included stalled
demand for x86-based ProLiant servers, which was consistent with the industry,
and continued weakness in Itanium-based Integrity server revenue. IBM held the
number 2 spot with 27.3% share for the quarter as factory revenue decreased
7.3% compared to 1Q11. Demand for IBM's Power Systems and x86-based System x
servers was flat year-over-year while demand for System z declined
significantly in the quarter due to the combined effects of a strong
year-over-year compare and the end of a refresh cycle. Dell maintained the
third position with 15.6% factory revenue market share in 1Q12 as factory
revenue decreased 2.0% compared to 1Q11. Oracle maintained the number 4
position with 6.1% factory revenue share; Oracle's 1Q12 factory revenue
decreased 7.3% compared to 1Q11. Fujitsu ended the quarter in a statistical
tie* for the number 4 position with 5.2% factory revenue share following a
7.3% year-over-year increase in server revenue.

Top Server Market Findings

  *Linux server demand was positively impacted by high performance computing
    (HPC) and cloud infrastructure deployments, as hardware revenue improved
    16.0% year over year in 1Q12 to $2.4 billion. Linux servers now represent
    20.7% of all server revenue, up 3.3 points when compared with the first
    quarter of 2011.
  *Microsoft Windows server demand was up 1.3% year over year in 1Q12 with
    quarterly server hardware revenue totaling $5.9 billion representing 50.2%
    of overall quarterly factory revenue, up 1.8 points over the prior year's
    quarter.
  *Unix servers experienced a revenue decline of 17.2% year over year to $2.2
    billion representing 18.3% of quarterly server revenue for the quarter.
    IBM's Unix server revenue declined 3.7% year-over-year and gained 6.3
    points of Unix server market share when compared with the first quarter of
    2011.
  *The market for non-x86 servers, including servers based on RISC, EPIC
    (Itanium-based), and CISC processors, declined 16.1% year over year to
    $3.4 billion in 1Q12. This is the third consecutive quarter in which
    non-x86 servers have exhibited a revenue decline. Non-x86 based systems
    now comprise 28.5% of the server market, the lowest level ever reported in
    IDC's quarterly server tracker.

"The Unix server refresh has largely ended as the Unix server market is in
decline again, driven by workload consolidation and migration to competing
platforms," said Kuba Stolarski, research manager, Enterprise Servers at IDC.
"Recent heightened awareness of the future of Itanium is also pressing down on
customer demand for non-x86 servers and price competition is helping to drive
down revenues in this segment. IDC expects the Unix server market to stabilize
over the next few years and remain a smaller, specialized segment of the
overall server market."

Bladed Server Market Results

The blade market continued its growth in the quarter with factory revenue
increasing 7.3% year over year, with shipment growth increasing by 4.8%
compared to 1Q11. Overall, bladed servers, including x86, EPIC, and RISC
blades, accounted for $2.0 billion in revenues, representing 16.6% of
quarterly server market revenue. More than 90% of all blade revenue is driven
by x86-based blades, which now represent 21.3% of all x86 server revenue. HP
maintained the number 1 spot in the server blade market in 1Q12 with 46.1%
revenue share, while IBM finished with 18.9% revenue share. Cisco and Dell
rounded out the top 4 with 12.8% and 8.7% factory revenue share, respectively.
Cisco's blade server revenue increased 48.8% year over year and gained 3.6
points of blade server market share when compared with the first quarter of
2011.

"Modular form factors drove the server market in the first quarter, with
blades increasing 7.3% annually and density optimized servers increasing 38.8%
annually. Blades now account for 16.6% of all server revenue, while density
optimized accounts for 4.5%," said Jed Scaramella, research manager,
Enterprise Servers at IDC. "In the first quarter of 2012, several vendors
announced converged solutions for blade platforms; IDC expects these to ramp
into the market starting in the second quarter delivering IT organizations an
integrated system for server, storage, and network."

x86 Industry Standard Server Market Dynamics

Demand for x86 servers weakened in 1Q12 in advance of Intel's Xeon E5
dual-socket server processor launch in March. Overall revenues increased 4.5%
in the quarter to $8.4 billion worldwide as unit shipments increased 3.2% to
1.9 million servers. HP led the market with 35.3% revenue share based on 2.8%
revenue decline over 1Q11. Dell retained second place, securing 21.8% revenue
share, while IBM now holds 15.2% revenue share. Overall, this was the ninth
quarter out of the previous ten quarters with year-over-year increases in
average selling prices for x86 servers as both the mix of systems and average
system configurations continue to move up-market, driving generally higher
product margin for x86 ecosystem players. Additionally, this was the tenth
consecutive quarter of year-over-year shipment growth for x86 servers with
particular strength in all regions except Canada and Middle East & Africa in
1Q12.

                                                        
Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, First
Quarter of 2012
(Revenues are in Millions)
                                                                             
                                1Q12        1Q11        1Q11       1Q12/1Q11
Vendor         1Q12 Revenue     Market      Revenue     Market     Revenue
                                Share                   Share      Growth
1. HP          $3,460           29.3%       $3,838      31.7%      -9.8%
2. IBM         $3,223           27.3%       $3,477      28.8%      -7.3%
3. Dell        $1,842           15.6%       $1,879      15.5%      -2.0%
4. Oracle      $718             6.1%        $775        6.4%       -7.3%
4. Fujitsu     $614             5.2%        $573        4.7%       7.3%
Others         $1,950           16.5%       $1,551      12.8%      25.8%
All            $11,808          100%        $12,093     100%       -2.4%
Vendors
                                                                             
Source: IDC's Worldwide Quarterly Server Tracker, May 2012
                                                                             

Note:*IDC declares a statistical tie in the worldwide server market when there
is less than one percent difference in the revenue share of two or more
vendors.

In addition to the table above, a bar chart showing the comparative market
shares for the top 5 vendors in the 1Q12 and 1Q11 worldwide server market is
available at IDC.com. The chart is intended for public use in online news
articles and social media. Instructions on how to embed this graphic can be
found by viewing this press release on IDC.com.

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 Lidice Fernandez
at 305-351-3057 or lfernandez@idc.com.

About IDC
International Data Corporation (IDC) is the premier global provider of market
intelligence, advisory services, and events for the information technology,
telecommunications, and consumer technology markets. IDC helps IT
professionals, business executives, and the investment community to make
fact-based decisions on technology purchases and business strategy. More than
1,000 IDC analysts provide global, regional, and local expertise on technology
and industry opportunities and trends in over 110 countries. For more than 48
years, IDC has provided strategic insights to help our clients achieve their
key business objectives. IDC is a subsidiary of IDG, the world's leading
technology media, research, and events company. You can learn more about IDC
by visiting www.idc.com.

All product and company names may be trademarks or registered trademarks of
their respective holders.

Contact:

International Data Corporation (IDC)
Matt Eastwood, 508-935-4503
meastwood@idc.com
or
Jed Scaramella, 508-935-4596
jscaramella@idc.com
or
Michael Shirer, 508-935-4200
press@idc.com