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28 Feb 2018

Worldwide Server Market Revenue Surges 26.4% in the Fourth Quarter Capping Off a Strong Second Half of 2017, According to IDC

FRAMINGHAM, Mass., February 28, 2018 – According to the International Data Corporation (IDC) Worldwide Q uarterly Server Tracker, vendor revenue in the worldwide server market increased 26.4% year over year to $20.7 billion in the fourth quarter of 2017 (4Q17). The server market continues to gain momentum, as traction for newer Purley- and EPYC-based offerings grows. While demand from cloud service providers has propped up overall market performance, other areas of the server market continue to show growth now as well. Worldwide server shipments increased 10.8% year over year to 2.84 million units in 4Q17.

Volume server revenue increased by 21.9% to $15.8 billion, while midrange server revenue grew 48.5% to $1.9 billion. High-end systems grew 41.1% to $2.9 billion, driven by IBM's z14 launch last quarter. IDC expects continued long-term secular declines in high-end system revenue, with short periods of growth related to major platform refreshes.

"Hyperscalers remained a central driver of volume demand in the fourth quarter with leaders such as Amazon, Facebook, and Google continuing their datacenter expansions and updates," said Sanjay Medvitz, senior research analyst, Servers and Storage at IDC. "ODMs continue to be the primary beneficiaries from hyperscale server demand. Some OEMs are also finding growth in this area, but the competitive dynamic of this market has also driven many OEMs such as HPE to focus on the enterprise. For example, HPE/New H3C Group grew 38.6% and 114.6% in High-End and Midrange Enterprise Servers, respectively. Other highlights in the quarter include robust growth from Dell Inc., which continues to capitalize on expanded opportunities from its merger with EMC, and IBM, which experienced another successful quarter from its refreshed system z business."

Overall Server Market Standings, by Company

HPE/New H3C Group and Dell Inc. were statistically tied* for first in the worldwide server market with 18.4%, and 17.5% market shares respectively in 4Q17. HPE/New H3C Group revenue increased 10.1% year over year to $3.8 billion, while Dell Inc. increased 39.9% year over year to $3.6 billion. HPE's share and year-over-year growth rate includes revenues from the H3C joint venture in China that began in May of 2016; thus, the reported HPE/New H3C Group combines server revenue for both companies globally. IBM captured the third market position at 13.0% share with revenue growing 50.3% year over year to $2.7 billion. Lenovo and Cisco were statistically tied* for fourth position. Lenovo had 5.3% share, with revenue increasing 15.1% to $1.1 billion and Cisco had 5.1% share with revenue increasing 14.8% to $1.1 billion. The ODM Direct group of vendors grew revenue by 48.1% to $4.2 billion. Dell Inc. led the server market in terms of unit share at 20.5%.

Top 5 Companies, Worldwide Server Vendor Revenue, Market Share, and Growth, Fourth Quarter of 2017 (Revenues are in US$ Millions)

Company

4Q17 Revenue

4Q17 Market Share

4Q16 Revenue

4Q16 Market Share

4Q17/4Q16 Revenue Growth

1. HPE/New H3C Group* **

$3,801.9

18.4%

$3,454.1

21.1%

10.1%

1. Dell Inc.*

$3,607.0

17.5%

$2,577.9

15.8%

39.9%

3. IBM

$2,693.0

13.0%

$1,791.8

11.0%

50.3%

4. Lenovo*

$1,090.0

5.3%

$946.8

5.8%

15.1%

4. Cisco*

$1,051.4

5.1%

$916.1

5.6%

14.8%

ODM Direct

$4,245.4

20.6%

$2,866.9

17.5%

48.1%

Others

$4,164.4

20.2%

$3,790.5

23.2%

9.9%

Total

$20,653.1

100.0%

$16,344.1

100.0%

26.4%

Source: IDC Worldwide Quarterly Server Tracker, February 28, 2017

Notes:

* IDC declares a statistical tie in the worldwide server market when there is a difference of one percent or less in the share of revenues or shipments among two or more vendors.

** Due to the existing joint venture between HPE and the New H3C Group, IDC will be reporting external market share on a global level for HPE and New H3C Group as "HPE/New H3C Group" starting from 2Q 2016 and going forward.



Top 5 Companies, Worldwide Server Unit Shipments, Market Share, and Growth, Fourth Quarter of 2017 (Units are in Thousands)

Company

4Q17 Unit Shipments

4Q17 Market Share

4Q16 Unit Shipments

4Q16 Market Share

4Q17/4Q16 Unit Growth

1. Dell Inc.

582.5

20.5%

531.6

20.7%

9.6%

2. HPE/New H3C Group**

479.7

16.9%

520.7

20.3%

-7.9%

3. Lenovo*

181.6

6.4%

218.7

8.5%

-17.0%

3. Huawei*

166.4

5.9%

179.1

7.0%

-7.1%

3. Super Micro*

158.5

5.6%

123.8

4.8%

28.1%

3. Inspur*

154.1

5.4%

113.5

4.4%

35.7%

ODM Direct

653.0

23.0%

401.1

15.6%

62.8%

Others

465.1

16.4%

475.8

18.6%

-2.2%

Total

2,840.8

100.0%

2,564.2

100.0%

10.8%

Source: IDC Worldwide Quarterly Server Tracker, February 28, 2017

Notes:

* IDC declares a statistical tie in the worldwide server market when there is a difference of one percent or less in the share of revenues or shipments among two or more vendors.

** Due to the existing joint venture between HPE and the New H3C Group, IDC will be reporting external market share on a global level for HPE and New H3C Group as "HPE/New H3C Group" starting from 2Q 2016 and going forward.

Top Server Market Findings

On a geographic basis, Canada was the fastest growing region in 4Q17 with 69.7% year-over-year growth. The United States grew 29.6%, Europe, the Middle East and Africa (EMEA) grew 17.4%, and Latin America declined 5.0%. Asia/Pacific (excluding Japan and China) grew 38.2%, China grew 33.8%, and Japan grew 4.3%.

Demand for x86 servers increased 24.7% in 4Q17 with $17.5 billion in revenues. Non-x86 servers grew 36.4% year over year to $3.2 billion.

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 vendor revenue for a server system. IDC presents data in vendor revenue to determine market share position. Vendor revenue represents those dollars recognized by multi-user system and server vendors for ISS (initial server shipment) 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 Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly unit shipments and revenues (both vendor revenue and value of shipments), 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

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. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of IDG, the world's leading media, data and marketing services company that activates and engages the most influential technology buyers. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn.

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