According to the International Data Corporation (IDC ) Worldwide Quarterly Server Tracker , vendor revenue in the worldwide server market increased 5.1% year over year to $13.4 billion in the third quarter of 2015 (3Q15), the sixth consecutive quarter of year-over-year revenue growth. During this quarter, revenue grew in rack optimized, blade, and density-optimized servers, while towers declined. Worldwide server shipments totaled 2.49 million units in 3Q15, an increase of 4.5% when compared with the third quarter of 2014.
On a year-over-year basis, volume system revenue increased by 7.0% and high-end system demand increased by 1.2% in 3Q15 to $10.8 billion and $1.4 billion, respectively. The volume segment was aided by a continued expansion of x86-based hyper-scale datacenters coupled with enterprise and SMB refresh of x86-based platforms, while high-end systems were helped by IBM's z13 refresh, which began in 1Q15 and has since been decelerating. Meanwhile, 3Q15 demand for midrange systems contracted by -5.8% year over year to $1.2 billion, as the x86 refresh appears to have run its course in this segment.
"As the server market nears the end of 2015 with continued growth, fears of depleted IT budgets from an early run on servers have failed to materialize," said Kuba Stolarski , Research Director, Servers and Emerging Technologies at IDC. "At the same time, that perfect storm in the first quarter could not have been expected to continue through the end of the year, as the effects of the cyclical enterprise refresh, Windows Server 2003 end of support, and Grantley platform refreshes all come to an end. Looking forward, IDC sees modest opportunities for short term market growth related to the upcoming Microsoft SQL Server 2005 end of support on April 16, 2016; we estimate approximately 800,000 servers globally still running SQL Server 2005. In the longer term, IDC expects server market growth to be driven by software-defined, disaggregated systems and network edge-deployed Internet of Things (IoT) compute."
Overall Server Market Standings, by Vendor
HP captured worldwide unit market share of 27.5% in 3Q15 on 9.0% year-over-year revenue growth to $3.7 billion. HP's revenue growth was primarily driven by strong demand for its density-optimized servers, which grew 37.2% year over year, and its rack optimized servers, which grew at 14.2% year over year but still managed to contribute a larger portion to HP's overall revenue growth.
Dell showed year-over-year revenue growth of 7.3% and its $2.4 billion placed the company in the number 2 position with 18.1% market share this quarter. Dell benefited from revenue growth in its blade and rack-optimized products. Dell's blade server revenue grew faster than that of any of the top 5 vendors at 34.8%, excepting Lenovo's acquisition of IBM's x86 server business.
IBM retained its number 3 position following its x86 divestiture with $1.3 billion in revenue and 9.6% market share. IBM's revenues are now associated with its POWER and System Z product lines.
Lenovo finished the quarter in the number 4 position with 7.8% worldwide market share on $1.1 billion in 3Q15 revenues. Cisco was in fifth place with $886 million in revenue and 6.6% revenue market share. Cisco's year-over-year growth of 12.7% continues to be above average for the industry, suggesting that the company is not done capturing incremental market share in the server market. Cisco's blade business also continued to grow well, with Cisco's blade revenue second only to HP in 3Q15.
Datacenters continue to standardize on a rack-based architecture," said Jorge Vela , Research Analyst, Servers and Virtualization at IDC. "The overall market benefited from this trend, with rack-optimized servers growing much faster than the market at 9.7%. Overall, racks contributed 125% and 112% to unit and revenue growth, respectively; without this growth, the market would have been in the red. More than 130,000 extra units of this form factor shipped this quarter compared to a year ago, adding an extra $727 million to the overall market. Dell and HP contributed to more than half of this growth, and the success of this form factor allowed them to remain at the top of the market and even increase their market share. At the same time, Cisco and ODM manufacturers continue to challenge the two market leaders, gaining market share at the expense of smaller competitors."
Top Server Market Findings
• After two quarters of U.S. market growth leadership, Asia/Pacific regained the lead with 24.0% year-over-year revenue growth, propped up by 32.4% year-over-year growth in China. The U.S. revenue growth rate was a modest 4.2% year over year. Canada and EMEA followed with 2.3% and 1.9% revenue growth, respectively. Japan and Latin America showed declines of -15.2% and -21.4%, respectively.
• Demand for x86 servers improved again in 3Q15 with revenues increasing 7.1% year over year to $11.5 billion worldwide as unit shipments increased 4.5% to 2.47 million servers. HP led the market with 30.3% revenue share based on 11.9% revenue growth year over year. Dell retained second place, securing 21.2% revenue share following 7.3% year over year revenue growth.
• Non-x86 servers experienced a stronger decline this quarter, down -5.5% year over year, after a very strong 1Q15 and only a slight decline in 2Q15. IBM's z13 platform refresh, which began two quarters ago, continued to prop up the non-x86 segment, giving IBM's system Z 15.0% year-over-year growth.
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 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 Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both initial server shipments and upgrades) and revenues (both value and vendor revenue), segmented by vendor, product 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 .
On a year-over-year basis, volume system revenue increased by 7.0% and high-end system demand increased by 1.2% in 3Q15 to $10.8 billion and $1.4 billion, respectively. The volume segment was aided by a continued expansion of x86-based hyper-scale datacenters coupled with enterprise and SMB refresh of x86-based platforms, while high-end systems were helped by IBM's z13 refresh, which began in 1Q15 and has since been decelerating. Meanwhile, 3Q15 demand for midrange systems contracted by -5.8% year over year to $1.2 billion, as the x86 refresh appears to have run its course in this segment.
"As the server market nears the end of 2015 with continued growth, fears of depleted IT budgets from an early run on servers have failed to materialize," said Kuba Stolarski , Research Director, Servers and Emerging Technologies at IDC. "At the same time, that perfect storm in the first quarter could not have been expected to continue through the end of the year, as the effects of the cyclical enterprise refresh, Windows Server 2003 end of support, and Grantley platform refreshes all come to an end. Looking forward, IDC sees modest opportunities for short term market growth related to the upcoming Microsoft SQL Server 2005 end of support on April 16, 2016; we estimate approximately 800,000 servers globally still running SQL Server 2005. In the longer term, IDC expects server market growth to be driven by software-defined, disaggregated systems and network edge-deployed Internet of Things (IoT) compute."
Overall Server Market Standings, by Vendor
HP captured worldwide unit market share of 27.5% in 3Q15 on 9.0% year-over-year revenue growth to $3.7 billion. HP's revenue growth was primarily driven by strong demand for its density-optimized servers, which grew 37.2% year over year, and its rack optimized servers, which grew at 14.2% year over year but still managed to contribute a larger portion to HP's overall revenue growth.
Dell showed year-over-year revenue growth of 7.3% and its $2.4 billion placed the company in the number 2 position with 18.1% market share this quarter. Dell benefited from revenue growth in its blade and rack-optimized products. Dell's blade server revenue grew faster than that of any of the top 5 vendors at 34.8%, excepting Lenovo's acquisition of IBM's x86 server business.
IBM retained its number 3 position following its x86 divestiture with $1.3 billion in revenue and 9.6% market share. IBM's revenues are now associated with its POWER and System Z product lines.
Lenovo finished the quarter in the number 4 position with 7.8% worldwide market share on $1.1 billion in 3Q15 revenues. Cisco was in fifth place with $886 million in revenue and 6.6% revenue market share. Cisco's year-over-year growth of 12.7% continues to be above average for the industry, suggesting that the company is not done capturing incremental market share in the server market. Cisco's blade business also continued to grow well, with Cisco's blade revenue second only to HP in 3Q15.
Datacenters continue to standardize on a rack-based architecture," said Jorge Vela , Research Analyst, Servers and Virtualization at IDC. "The overall market benefited from this trend, with rack-optimized servers growing much faster than the market at 9.7%. Overall, racks contributed 125% and 112% to unit and revenue growth, respectively; without this growth, the market would have been in the red. More than 130,000 extra units of this form factor shipped this quarter compared to a year ago, adding an extra $727 million to the overall market. Dell and HP contributed to more than half of this growth, and the success of this form factor allowed them to remain at the top of the market and even increase their market share. At the same time, Cisco and ODM manufacturers continue to challenge the two market leaders, gaining market share at the expense of smaller competitors."
Top Server Market Findings
• After two quarters of U.S. market growth leadership, Asia/Pacific regained the lead with 24.0% year-over-year revenue growth, propped up by 32.4% year-over-year growth in China. The U.S. revenue growth rate was a modest 4.2% year over year. Canada and EMEA followed with 2.3% and 1.9% revenue growth, respectively. Japan and Latin America showed declines of -15.2% and -21.4%, respectively.
• Demand for x86 servers improved again in 3Q15 with revenues increasing 7.1% year over year to $11.5 billion worldwide as unit shipments increased 4.5% to 2.47 million servers. HP led the market with 30.3% revenue share based on 11.9% revenue growth year over year. Dell retained second place, securing 21.2% revenue share following 7.3% year over year revenue growth.
• Non-x86 servers experienced a stronger decline this quarter, down -5.5% year over year, after a very strong 1Q15 and only a slight decline in 2Q15. IBM's z13 platform refresh, which began two quarters ago, continued to prop up the non-x86 segment, giving IBM's system Z 15.0% year-over-year growth.
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 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 Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both initial server shipments and upgrades) and revenues (both value and vendor revenue), segmented by vendor, product 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 .
