Server shipments across the globe grew by 1,4% in the first quarter of 2014, says Gartner – although server revenue has declined by 4,1% when compared to the previous year. “The first quarter of 2014 produced relatively weak growth on a global level with a variation in results by region,” says Jeffrey Hewitt, research vice president at Gartner.
“All regions showed a decline in either shipments or revenue except for Asia/Pacific. Asia/Pacific posted a 3,3% increase in revenue and an 18% increase in shipments. In Japan shipments increased by 13,5%, but revenue declined by 9,2% while in Western Europe shipments declined by 4,8% and revenues rose 6,7%.”
“x86 servers managed to produce an increase with growth of 1,7% in units for the year and 2,8% in revenue,” Hewitt says. “RISC/Itanium Unix servers fell globally in the first quarter of 2014 — down 19,9% in shipments and a 16,9% decline in vendor revenue compared with the same quarter last year. The ‘other’ CPU category, which is primarily mainframes, showed a decline of 37,6% year over year in terms of revenue.”
HP led the worldwide server market in revenue terms in the first quarter of 2014. The company ended the quarter with $2,9-billion in revenue, for a total share of 25,5% worldwide. This was down 2,3% compared with the same quarter in 2013.
Cisco was the only company in the top five that increased revenue in the first quarter of 2014, with growth of 37% compared with the same quarter in 2013.
In server shipments, HP remained the worldwide leader in the first quarter of 2014 even though its shipments declined 7,9% compared with the first quarter of 2013. HP’s worldwide server shipment share was 22,6%, followed by Dell with 19,7% of the market.
Of the top five vendors in server shipments worldwide, only Huawei and Inspur Electronics increased shipments in the first quarter of 2014, with growth of 61% and 288,7%, respectively. This is the first time Inspur Electronics made the top five in server shipments.
In terms of server form factors, x86 blade servers decreased 3,9% in shipments, but increased 5,2% in revenue for the quarter. The rack-optimized form factor climbed 1,4% in shipments and 1,7% in revenue in the first quarter of 2014.
In Europe, the Middle East and Africa (EMEA), while server shipments continued to decline in the first quarter of 2014, revenues grew for the first time after 10 consecutive quarters of year-over-year declines. Server shipments totalled 547 900 units, a decrease of 6,1% from the first quarter of 2013. Server revenue totalled $3-billion, an increase of 2,5% in the first quarter of 2014.
“Although shipments contracted, the fact that the server market has finally shown revenue growth will be a welcome relief for server vendors,” says Adrian O’Connell, research director at Gartner. “The business environment in EMEA remains challenging, but the severe declines that we’ve witnessed in the non-x86 product segments have abated, at least in the first quarter of 2014.”
From a regional perspective, Eastern Europe experienced the largest revenue decline of 14,5% in the first quarter of 2014. Server revenues in the Middle East and Africa region declined 3,6%, but Western Europe achieved an increase of 6,7% in revenue.
In the first quarter of 2014, x86 server revenue increased 3,4%, while RISC/Itanium UNIX revenue declined 3,4% and the Other CPU segment revenue increased 8,6%. “Platform migrations continued to be a factor but the rate of these declines has slowed and the worst rates of decline may be behind us,” says . O’Connell.
In the first quarter of 2014 HP extended its revenue share lead with 5,1% growth, despite experiencing a slight decline in server shipments. HP continued to improve its execution and also benefited from its competitors’ difficulties.
Second-ranked IBM continued to suffer from cyclically weak product lifecycles, but its 8,7% decline was also compounded by additional weakness for its x86 business. Third-placed Dell suffered when compared to a particularly strong first quarter in 2013.
“After some challenges in 2013, vendors will be relieved to see 2014 get off to a relatively good start,” says O’Connell.
“The demand environment is stabilizing but challenges remain. We expect users will continue to be conservative in their investments for some time and platform migrations will remain a challenging factor. We are likely to see revenue growth in 2014, but the reality is that the market is operating from a significantly lower level than it was prior to the downturn in 2008.”
