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Server Revenues Continue to Decline in 4Q16

By Sean Michael Kerner (Send Email)
Posted March 2, 2017


2016 was not a fantastic year for the server market. Analyst firms IDC and Gartner have published their fourth quarter 2016 server reports, and both show declining revenues and shipments.

For the quarter, Gartner reported a 1.9 percent decline in worldwide server revenue, while IDC reported a more dramatic 4.6 percent year-over-year decline to $14.6 billion in the fourth quarter of 2016.

Looking at server shipments in the fourth quarter, Gartner reported server shipments declined by 0.6 percent. In contrast, IDC reported global server shipments decreased 3.5 percent to 2.55 million units. For the full 2016 year, Gartner reported worldwide server revenues declined by 2.7 percent, with shipments declining 0.1 percent.

"There were some distinct factors that produced the final results for 2016," Jeffrey Hewitt, research vice president at Gartner, said in a statement. "Hyperscale data centers (e.g. Facebook and Google) grew and, at the same time, drove some significant server replacements."

He added that, "enterprises grew at a lower rate as they continued to leverage server applications through virtualization and, in some cases, service providers in the cloud."

The impact of the cloud was also cited by IDC as impacting server revenues and shipments.

"Some public cloud datacenter deployments are being delayed, and there are indications that overall levels of deployment and refresh may slow down even through the long term as hyperscalers continue to evaluate their hardware provisioning criteria," Kuba Stolarski, research director, Computing Platforms at IDC, said in a statement.

"On the enterprise side, we are seeing ongoing weakness as companies struggle to decide whether to deploy workloads on premises or off, and continue to consolidate existing workloads on fewer servers," Stolarski continued.

A Closer Look at Non-x86 Server Revenues

Looking at non-x86 servers, IDC reported that there was $2.4 billion in revenue, representing a 16.7 percent year-over-year decline. Non-x86 servers now represent 16.2 percent of quarterly server revenues. The leading vendor in the non-x86 segment is IBM, which held a 75.4 percent market revenue share in the fourth quarter of 2016.

While ARM is part of the non-x86 category, IDC noted that ARM server-related revenues are minimal and are not currently making any impact on the global server market.

Once again, according to both Gartner and IDC, Hewlett Packard Enterprise (HPE) was the leading server vendor in the world both in terms of revenue and shipments. Dell Technology is in second followed by IBM in third. Rounding out the top five is Lenovo in the number four slot is a virtual tie with Cisco.

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist.

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