Q2 global server market revenue, shipments down on weak demand

Server market revenue falls 6.2 percent on-year, while shipments decline 1.2 percent, as customers focus on consolidation and migration, while economic conditions dampen demand for new IT projects, according to IDC.
Written by Ellyne Phneah, Contributor

Worldwide server market revenue fell 6.2 percent year-on-year to US$11.9 billion in the second quarter of 2013, the second consecutive quarter of declines, according to IDC. 

The research firm's Worldwide Quarterly Server Tracker released Wednesday, also found server unit shipments dropped 1.2 percent year over year in Q2 2013 to 2 million units. This was also the third consecutive quarter where year-on-year server shipments fell.
Volume systems revenue also dipped 2.4 percent, while demand for mid-range and high-end systems experienced year- on-year declines of 22.3 percent and 9.5 percent respectively in Q2 2013.

All three segments had been impacted by the relatively difficult year-on-year combined with transitions in technology refresh cycles, IDC noted.

Mainstream SMB and enterprise customers continue to focus on consolidation, virtualization and migration initiatives aimed at increasing efficiency and lowering datacenter infrastructure costs, Matt Eastwood, group vice president and general manager of enterprise platforms at IDC, said in a statement. At the same time, difficult economic conditions are dampening demand for new IT projects necessary to grow the server market globally, he added.

"It is clear that the competitive dynamics in the server market remain fierce as the leading server vendors work to offset weak demand for generally higher margin Unix and blade servers with lower margin rack and density optimized servers," Eastwood said.

Cisco, Dell experience highest ever server market share

Delving into vendor analysis, IDC found Cisco had ended the quarter in fifth place with 4.5 percent factory revenue share followed by 42.6 percent year over year revenue growth. This is Cisco's highest ever market share, breaking last quarter's statistical tie with Fujitsu.

Dell too, maintained its spot at third place with 18.8 percent factory revenue share in the second quarter, but its factory revenue increased 10.3 percent compared to the same quarter last year. It also holds the highest ever server market share in any quarter.

IBM took the number one position with 27.9 percent factory revenue share in Q2 2013, but experienced a 10 percent year over year decline in factory revenue on soft demand for Systems x and power systems.

This is followed by HP with 25.9 percent factory revenue share, following a 17.5 percent year over year decline in factory revenue. This is due to "disappointing demand" for x86-based ProLiant servers coupled with continued declines in HP Integrity server demand this quarter, according to IDC.

Oracle, while maintaining its position at fourth place had 6 percent factory revenue share, but its second quarter factory revenue fell 5.7 percent compared to Q2 2013.

(Source: IDC Worldwide Quarterly Server Tracker, August 2013)


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