IDC Reports Decline in Worldwide Server Market

Sales of non-x86 servers down; Linux and server blades up

Server market revenues decreased worldwide by 4.8 percent in Q2 2012 from their year-ago level, according to analysts at IDC.

This is the third consecutive quarter of year-over-year revenue declines IDC says; the company drew data from its Worldwide Quarterly Server Tracker reports and pointed out that the contrast seen this year stems in part from the positive technology refresh cycles in 2010 and 2011.  Economic uncertainty also played a part in the decline.

The market is "working its way through a number of technology transitions impacting customer demand for x86, Unix and mainframe-class systems," said Matt Eastwood, group vice president and general manager for enterprise platforms at IDC, in a prepared statement. "Economic uncertainty is weighing on the market and the sales cycle is lengthening."

Unix servers and non-x86 servers had the worst showing in the report; Unix server revenue was off 20.3 percent from one year ago. Non-x86 server revenue dropped 19.4 percent from the year-ago period.

"The Unix server market is in between generation refresh cycles and continues to be hampered by workload consolidation and migration to other platforms," explained Kuba Stolarski, research manager for enterprise servers at IDC. "IDC expects the Unix market to stabilize over the next few years and remain a smaller, specialized segment of the overall server market."

Although the Unix and non-x86 markets lagged, bladed servers and Linux servers enjoyed a rise in demand. IDC attributes the increase of Linux hardware revenue (a rise of 1.7 percent) to the growing demands of high-performance computing and cloud infrastructure deployments. Bladed server factory revenue was up 6.3 percent, as were bladed server shipment numbers (up 4.1 percent from Q2 2011).

"Together, blade- and density-optimized servers grew 15 percent in annual revenue and now represent 22 percent of the market," said Jed Scaramella, research manager for enterprise servers at IDC, in a press release. "These modular form factors are expected to continue to gain adoption, with blades targeting virtualized environments in enterprises and density-optimized servers targeting large-scale homogeneous environments in datacenters."

Hewlett-Packard Co. and IBM Corp. shared the top spot for factory revenue share this quarter, although both companies saw year-over-year factory revenue declines (of 5 percent and 8.2 percent, respectively). Dell Inc. took third place with a 5.9 percent revenue increase. 

IDC expects increased demand as new servers hit the market. "It is important to note that IDC believes that server demand will begin to improve in the second half of 2012 following a number of critical product refreshes which continue to be announced," Eastwood said.

About the Author

Katrina Carrasco is the associate group managing editor for the 1105 Enterprise Computing Group. She can be reached at kcarrasco@1105media.com.

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