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HP, IBM Lead Weak Worldwide Server Market

First-quarter server revenue declined 4.1 percent year-over-year despite worldwide server shipment growth of 1.4 percent during the period, according to a report from IT research firm Gartner.

Cisco was the only company in the top five that saw an increase in first-quarter revenue, with growth of 37 percent, compared with the same quarter in 2013. The company, however, placed fourth overall, behind Hewlett-Packard, IBM and Dell.

Worldwide server market leader HP ended the quarter with $2.9 billion in revenue, for a total market share of 25.5 percent worldwide, down 2.3 percent from the same quarter in 2013.

In terms of server shipments, HP also remained the worldwide leader in the first quarter of 2014 even though its shipments declined 7.9 percent from the first quarter of 2013.

The company's worldwide server shipment share was 22.6 percent, with Dell in second place (with 19.7 percent) and IBM in third (7 percent). Cisco and Fujitsu rounded out the top five with 5.4 percent and 5.1 percent.

The report noted IBM continues to suffer from cyclically weak product lifecycles, but its 8.7 percent decline in revenue was also compounded by additional weakness for its x86 business. Dell, meanwhile, suffered in the first quarter, compared with a particularly strong first quarter in 2013.

"x86 servers managed to produce an increase, with growth of 1.7 percent in units for the year and 2.8 percent in revenue," Jeffrey Hewitt, research vice president at Gartner, said in a statement. "RISC/Itanium Unix servers fell globally in the first quarter of 2014—down 19.9 percent in shipments and a 16.9 percent 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 percent year-over-year in terms of revenue."

All regions showed a decline in either shipments or revenue, except for the Asia/Pacific region, which posted a 3.3 percent increase in revenue and an 18 percent increase in shipments.

In Japan, shipments increased 13.5 percent, but revenue declined by 9.2 percent; in Western Europe shipments declined 4.8 percent and revenue rose 6.7 percent.

"After some challenges in 2013, vendors will be relieved to see 2014 get off to a relatively good start," Adrian O'Connell, research director at Gartner, said in a statement. "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."

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 percent and 288.7 percent.

This is the first time Inspur Electronics, a server manufacturing and software development company based in China, made the top five in server shipments, the report said.


Originally published on eWeek.
This article was originally published on May 29, 2014
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