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Worldwide Server Market Rebounds Sharply in Fourth Quarter as Demand for x86 Servers and High-end Systems Leads the Way,



  Worldwide Server Market Rebounds Sharply in Fourth Quarter as Demand for x86
  Servers and High-end Systems Leads the Way, According to IDC

Business Wire

FRAMINGHAM, Mass. -- February 27, 2013

According to the International Data Corporation (IDC) Worldwide Quarterly
Server Tracker, factory revenue in the worldwide server market increased 3.1%
year over year to $14.6 billion in the fourth quarter of 2012 (4Q12). This was
the first quarterly increase of factory revenue in five quarters. Worldwide
server shipments decreased 3.9% to 2.1 million units in 4Q12 when compared
with the same period in 2011. For the full year 2012, worldwide server revenue
decreased 1.9% to $51.3 billion when compared to 2011, while worldwide unit
shipments decreased 1.5% year over year to 8.1 million units.

On a year-over-year basis, volume systems and high-end systems experienced
4.2% and 6.4% revenue growth to $9.1 billion and $4.1 billion respectively in
4Q12. At the same time, demand for midrange systems experienced a
year-over-year revenue decline of 10.0% to $1.5 billion in 4Q12. The volume
segment and high-end systems were both buoyed by a favorable technology
refresh cycle with volume systems benefiting from continued demand for x86
servers deployed as part of consolidation and virtualization initiatives while
increased spending for high-end systems was helped by strong demand for IBM
System z mainframes.

"Despite experiencing the first quarterly growth in factory revenue in over a
year, the server market continued to show signs of lumpiness in the fourth
quarter," said Matt Eastwood, group vice president and general manager,
Enterprise Platforms at IDC. "IDC forecasted that server demand would begin to
improve in the second half of 2012 following a number of critical product
refreshes which occurred in the first half of the year. While this did happen
in the fourth quarter, market demand was uneven with the U.S., Asia/Pacific
and Latin America all experiencing sharp growth, while demand in all other
regions remained soft. Average selling prices for servers increased sharply in
the quarter as large and small enterprises continued to invest heavily in new
server capacity to drive additional consolidation and virtualization
initiatives."

Overall Server Market Standings, by Vendor

IBM held onto the number 1 spot in the worldwide server systems market with
36.5% market share in factory revenue for 4Q12, as revenue increased 3.1% year
over year. IBM experienced significant improvements in demand for its System z
mainframes aided by a strong product refresh cycle. The fourth quarter also
delivered the highest quarterly revenue IBM has achieved in System z in more
than a decade. HP held the number 2 spot with 24.8% share for the quarter as
revenue decreased 3.2% compared to 4Q11. Although HP experienced solid demand
for its x86-based ProLiant servers, it was offset by weak Itanium-based
Integrity server demand in the quarter. Dell increased server revenue by 5.7%
year over year and maintained third place with 15.1% factory revenue market
share in 4Q12. Three companies shared the number 4 market position, with
Oracle, Fujitsu and Cisco all locked in a statistical tie* in 4Q12.
Additionally, this was the first quarter that Cisco maintained a position in
the top 5 server rankings.

Top Server Market Findings

  * Linux server demand was positively impacted by high performance computing
    (HPC) and cloud infrastructure deployments, as hardware revenue improved
    12.7% year over year in 4Q12 to $3.0 billion. Linux servers now represent
    20.4% of all server revenue, up 1.7 points when compared with the fourth
    quarter of 2011.
  * Microsoft Windows server demand continued to increase in 4Q12 as hardware
    revenue increased 3.2% year over year. Quarterly revenue of $6.7 billion
    for Windows servers represented 45.8% of overall quarterly factory
    revenue, the same share as in the prior year's quarter.
  * Unix servers experienced a revenue decline of 24.1% year over year to $2.6
    billion representing 17.6% of quarterly server revenue. This was the sixth
    consecutive quarter of revenue decline in the Unix server market and all
    major Unix server vendors experienced a revenue decline when compared with
    the fourth quarter of 2011.
  * After five consecutive quarters of revenue declines, IBM's System z
    mainframe running z/OS increased revenue 55.6% year over year to $1.8
    billion, representing 12.3% of all server revenue in 4Q12.

"The IBM System z mainframe platform had its highest quarterly revenue since
1997, generating nearly $2 billion and driving the overall server market to
positive growth in the quarter," said Jean S. Bozman, Research Vice President
in IDC's Enterprise Platforms Group. "This dramatic growth was due to several
factors: technology refresh, new products such as zEnterprise, new accounts in
emerging economies, and consolidation of some enterprise Linux workloads onto
IBM System z, using the Integrated Facility for Linux (IFL) specialty engines.
Although revenue results for System z are traditionally heavier in the fourth
quarter, this accelerated acquisition shows the breadth and depth of the IBM
mainframe installed base."

X86 Industry Standard Server Market Dynamics

The x86 server market experienced sharp revenue growth in 4Q12 as systems
based on Intel's Sandy Bridge processor -- which was launched in early 2012 --
experienced strong demand which helped drive sharply higher average selling
prices across the market. The x86 server market accelerated in 4Q12,
increasing 6.0% in the quarter to $9.7 billion worldwide as unit shipments
decreased 3.7% to 2.1 million servers. Despite the shipment decline, this is
the highest quarterly revenue ever reported for x86 servers as the
architecture accounted for 66.2% of all server spending. HP's x86 factory
revenue increased 4.4% and it continued to lead the market with 32.7% revenue
share. Dell experienced 5.7% year-over-year growth in x86 server revenue and
retained second place with 22.9% revenue share. IBM continues to hold third
place with 16.7% x86 server revenue share following a 2.3% year-over-year
decline in revenue. Cisco moved into the fourth position in the market with
5.0% revenue share as a result of 50.7% revenue growth when compared to 4Q11,
while Fujitsu and Oracle tied* for fifth position with 3.1% and 2.7% share
respectively. As a result of a strong demand throughout the year, worldwide
x86 server revenue for 2012 increased 4.1% to $35.8 billion, while worldwide
x86 unit shipments decreased 0.4% to 8.0 million units.

Modular Form Factor Market Results

Servers in the modular form factor categories performed well in 4Q12. There
are two types of modular form factors, each with a distinct use case. Blade
servers, which are highly leveraged in enterprises' virtualized environments,
grew 3.3% year over year to $2.4 billion. Blades now account for 16.3% of
total server revenue. HP maintained the number 1 spot in the blade server
market in 4Q12 with 44.7% revenue share; IBM and Cisco followed in second and
third with 21.7% and 15.3% revenue share, respectively.

Density Optimized servers, utilized by large datacenters, experienced very
strong demand in 4Q12. Revenue grew 66.4% year over year in 4Q12 to $705
million as unit shipments increased 44.2% to just over 192,000 servers.
Density Optimized servers now represent 4.8% of all server revenue and 9.2% of
all server shipments. Dell maintained the number 1 spot in the Density
Optimized segment in 4Q12 with 50.8% revenue share. IBM and HP finished second
and third in revenue share with 12.8% and 9.1%, respectively.

"Both types of modular form factors outperformed the overall server market,
indicating customers are increasingly favoring specialization in their server
designs," said Jed Scaramella, research manager, Enterprise Servers. "Density
Optimized servers were positively impacted by the growth of service providers
in the market. In addition to HPC, Cloud and IT service providers favor the
highly efficient and scalable design of Density Optimized servers. Blade
servers are being leveraged in enterprises' virtualized and private cloud
environments. IDC is observing an increased interest from the market for
converged systems, which use blades as the building block. Enterprise IT
organizations are viewing converged systems as a method to simplify management
and increase their time to value."

 
Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, Fourth
Quarter of 2012
(Revenues are in Millions)
                 4Q12           4Q12         4Q11        4Q11        4Q12/4Q11
Vendor           Revenue        Market       Revenue     Market      Revenue
                                Share                    Share       Growth
1. IBM           $5,343         36.5%        $5,180      36.5%       3.1%
2. HP            $3,626         24.8%        $3,747      26.4%       -3.2%
3. Dell          $2,218         15.1%        $2,098      14.8%       5.7%
4. Oracle*       $602           4.1%         $733        5.2%        -17.8%
4.               $501           3.4%         $476        3.4%        5.3%
Fujitsu*
4. Cisco*        $480           3.3%         $319        2.2%        50.7%
Others           $1,869         12.8%        $1,641      11.6%       13.9%
                                                                      
All              $14,639        100%         $14,193     100%        3.1%
Vendors
 
IDC's Worldwide Quarterly Server Tracker, February 2013

* 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 graphic showing 4Q12 market share for the
top 5 vendors in the worldwide market as well as in emerging and mature
markets 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.

 
Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, Full Year
2012
(Revenues are in Millions)
                2012        2012           2011        2011          2012/2011
Vendor          Revenue     Market         Revenue     Market        Revenue
                            Share                      Share         Growth
1. IBM          $15,748     30.7%          $16,454     31.5%         -4.3%
2. HP           $14,149     27.6%          $15,300     29.3%         -7.5%
3. Dell         $8,165      15.9%          $7,814      15.0%         4.5%
4. Oracle       $2,660      5.2%           $3,218      6.2%          -17.4%
5. Fujitsu*     $2,070      4.0%           $2,492      4.8%          -16.9%
5. Cisco*       $1,610      3.1%           $1,020      2.0%          57.9%
Others          $6,873      13.4%          $5,951      11.4%         15.5%
                                                                      
All Vendors     $51,276     100%           $52,249     100%          -1.9%
 
IDC's Worldwide Quarterly Server Tracker, February 2013

* 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.

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 305-351-3051 or lfernandez@idc.com.

About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share,
and forecasts for hundreds of technology markets from more than 100 countries
around the globe. Using proprietary tools and research processes, IDC's
Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker
results are delivered to clients in user-friendly excel deliverables and
on-line query tools. The IDC Tracker Charts app, available at iTunes, allows
users to view data charts from the most recent IDC Tracker products on their
iPhone and iPad.

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 49
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
Jed Scaramella, 508-935-4596
jscaramella@idc.com
or
Jean Bozman, 650-350-6429
jbozman@idc.com
or
Michael Shirer, 508-935-4200
press@idc.com
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