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Worldwide server business ramps up in Q1 2018

Enterprise and SMBs that are replacing servers and investing in infrastructure are prompting the gradual growth of the industry.

Written by Charlie Osborne, Contributing Writer June 11, 2018 at 2:58 a.m. PT

Worldwide server revenue continues to grow with an increase of 33.4 percent in Q1 2018.

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According to Gartner, the server market is being driven by renewed interest in the hyperscale, data centers, and investment by everyone from enterprise players to SMBs seeking to update their infrastructure, abandon legacy systems and sign up to new technological solutions.

On Monday, the research firm said that server revenue grew by 33.4 percent worldwide in the first quarter. Shipments grew by 17.3 percent year-over-year.

"Enterprises and midsize businesses are in the process of investing in their on-premises and colocation infrastructure to support server replacements and growth requirements even as they continue to invest in public cloud solutions," said Jeffrey Hewitt, research vice president at Gartner. "Additionally, when it came to server average selling prices (ASP) increases for the quarter, one driver was the fact that DRAM prices increased due to constrained supplies."

The demand for DRAM has outstripped supply for over a year. The increasing demand for data storage has been prompted by the booming smartphone and tablet industry, the Internet of Things (IoT), and research projects ranging from artificial intelligence (AI) to autonomous driving.

The global chip industry has pushed up prices for DRAM across the board as a result. According to market research firm DRAMeXchange, global DRAM bit supply will grow by 19.6 percent over the course of 2018, while demand is forecast to surge by 22 percent.

North America and the Asia Pacific region enjoyed the most growth in the server industry, with estimates reaching 34 percent and 47.8 percent. When it comes to shipments, the regions grew by 24.3 percent and 21.9 percent, respectively.

The EMEA region posted server revenue growth of 32.1 percent, while shipments increased at a lower rate of 2.7 percent.

Dell EMC's shareholders are likely to be happy with a 51.4 percent growth rate in the worldwide server market in Q1 2018 and an estimated market share of 21.5 percent -- a 2.5 percent increase year-on-year.

In comparison, HPE has lost market share over the first quarter this year. The company's growth in the server market has been pegged at 10.4 percent, with overall market share now 19.9 percent, a decline from 24.1 percent in Q1 2017.

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When it comes to shipments, Dell maintained the top spot with market share of 18.2 percent, and despite a decline of 8.5 percent in server shipments, HPE has held onto second place. Inspur Electronics is not as well-known as Dell EMC or HPE, but the firm's growth and increase in market share is of note.

The x86 server market increased in revenue by 35.7 percent and shipments went up by an estimated 17.5 percent in Q1 2018.

However, shipment rates and revenue in the RISC/Itanium UNIX plummeted by 52.8 percent and 46.7 percent, respectively.

Ongoing issues with memory shortages and vendors forced to maintain a balance between pleasing shareholders through their profit margins and catering to the needs of customers may still cause industry growth problems throughout 2018.

However, the interest of businesses in server adoption has created a far stronger start to the year than we experienced back in 2017.