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30 May 2018

Worldwide Server Market Revenue Grew 38.6% in the First Quarter of 2018, According to IDC

FRAMINGHAM, Mass., May 30, 2018 – According to the International Data Corporation (IDC) Worldwide Q uarterly Server Tracker, vendor revenue in the worldwide server market increased 38.6% year over year to $18.8 billion during the first quarter of 2018 (1Q18). Worldwide server shipments increased 20.7% year over year to 2.7 million units in 1Q18.

The overall server market continued to strengthen with its third consecutive quarter of double-digit growth, generating more revenue than any other first quarter on record. This historic demand for servers is driven by a market-wide enterprise refresh cycle, strong demand from cloud service providers, increased use of servers as the core building blocks for software-defined infrastructure, broad demand for newer CPUs such as Intel's Purely platform, and growing deployments of next generation workloads. Average selling prices (ASPs) increased during the quarter due to richer configurations and increased component costs. The increased ASPs also contributed to revenue growth.

Volume server revenue increased by 41.3% to $15.9 billion, while midrange server revenue grew 31% to $1.7 billion. High-end systems grew 20.1% to $1.2 billion.

"Hyperscale growth continued to drive server volume demand in the first quarter," said Sanjay Medvitz, senior research analyst, Servers and Storage at IDC. "While various OEMs are finding success in this space, ODMs remain the primary beneficiary from the quickly growing hyperscale server demand, now accounting for roughly a quarter of overall server market revenue and shipments."

Overall Server Market Standings, by Company

Dell Inc. and HPE/New H3C Group were statistically tied* for first place in the worldwide server market with 19.1%, and 18.6% market shares respectively in 1Q18. Dell was the fastest growing server vendor among the top 5 companies, growing revenue 50.6% year over year to $3.6 billion and gaining 1.5 points of revenue share year over year on a strong performance in all major geographic regions. HPE/New H3C Group revenue increased 22.6% year over year in 1Q18 to $3.5 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. Lenovo, IBM, and Cisco were all statistically tied* for third position in the market with respective shares of 5.8%, 5.3%, and 5.2%. The ODM Direct group of vendors grew revenue by 57.1% (year over year) to $4.6 billion. Dell Inc led the worldwide server market in terms of unit shipments, accounting for 20.6% of all units shipped during the quarter.



Top 5 Companies, Worldwide Server Vendor Revenue, Market Share, and Growth, First Quarter of 2018 (Revenues are in US$ Millions)

Company

1Q18 Revenue

1Q18 Market Share

1Q17 Revenue

1Q17 Market Share

1Q18/1Q17 Revenue Growth

1. Dell Inc*

$3,594.0

19.1%

$2,386.6

17.6%

50.6%

1. HPE/New H3C Group* **

$3,508.6

18.6%

$2,861.7

21.1%

22.6%

3. Lenovo*

$1,088.9

5.8%

$726.0

5.3%

50.0%

3. IBM*

$989.0

5.3%

$744.0

5.5%

32.9%

3. Cisco*

$980.1

5.2%

$824.7

6.1%

18.8%

ODM Direct

$4,594.5

24.4%

$2,923.8

21.5%

57.1%

Others

$4,068.6

21.6%

$3,112.1

22.9%

30.7%

Total

$18,823.7

100.0%

$13,578.8

100.0%

38.6%

Source: IDC Worldwide Quarterly Server Tracker, May 30, 2018

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, First Quarter of 2018 (Units are in Thousands)

Company

1Q18 Unit Shipments

1Q18 Market Share

1Q17 Unit Shipments

1Q17 Market Share

1Q18/1Q17 Unit Growth

1. Dell Inc

555.8

20.6%

467.5

20.9%

18.9%

2. HPE/New H3C Group**

431.0

16.0%

460.4

20.6%

-6.4%

3. Inspur*

175.0

6.5%

98.6

4.4%

77.5%

3. Lenovo*

160.7

6.0%

146.2

6.5%

9.9%

3. Super Micro*

156.2

5.8%

117.5

5.3%

32.9%

ODM Direct

691.1

25.6%

443.6

19.9%

55.8%

Others

526.8

19.5%

500.5

22.4%

5.3%

Total

2,696.5

100.0%

2,234.4

100.0%

20.7%

Source: IDC Worldwide Quarterly Server Tracker, May 30, 2018

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, Asia/Pacific (excluding Japan) was the fastest growing region in 1Q18 with 51.7% year-over-year revenue growth. Latin America grew 41.1%, the United States grew 40.6%, Europe, the Middle East and Africa (EMEA) grew 35.0%, Canada grew 28.3%, and Japan grew 2.9%. China grew 67.4%.

Demand for x86 servers increased 41.0% in 1Q18 with $17.4 billion in revenues. Non-x86 servers grew 15.5% year over year to $1.4 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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For more information, contact:

Kuba Stolarski
kstolarski@idc.com
508-935-4172

Michael Shirer
press@idc.com
508-935-4200

Sanjay Medvitz
smedvitz@idc.com
508-935-4333