Server market revenue dips in Q1, HPE leads with 26.7% share

IDC Server market growth
Vendor revenue in the worldwide server market decreased 3.6 percent year over year to $12.4 billion in the first quarter of 2016, IDC Worldwide Quarterly Server Tracker report revealed.

This ended a seven quarter streak of year-over-year revenue growth. The drop reflected sluggish server market demand due to a pause in hyperscale server deployments and an end to the enterprise refresh cycle.

HPE’s server revenue increased 3.5 percent to$3.3 billion, while Dell faced a drop of 1.8 percent to $2.3 billion.

IBM server revenue recorded a steep fall of 32.9 percent to $1.1 billion. Lenovo’s revenue plunged 8.6 percent, while Cisco had a 4.5 percent decline.

Sluggishness was also observed in worldwide server shipments, with a decrease of 3 percent to 2.2 million units.

“As expected, server growth slowed in the first quarter, with a clear end to the Intel-led enterprise refresh, a pause in hyperscale cloud expansion, and a very difficult year-on-year comparison in the high end of the market, coming off of a major mainframe refresh from IBM one year ago,” said Kuba Stolarski, Research Director, Computing Platforms at IDC.

“Now that the cyclical refresh has comes to an end, the market focus is shifting towards software-defined infrastructure, hybrid environment management, and next-gen IT domains such as the Internet of Things (IoT), robotics, and cognitive analytics.”

Market share by vendor

HPE retained the number 1 position with 26.7 percent market share in vendor revenue for 1Q16.

Dell maintained its number 2 position, holding 18.3 percent vendor revenue market share. IBM retained the number 3 spot with 9.2 percent share.

Regional performance

Asia/Pacific (excluding Japan)(APeJ) experienced the sharpest revenue growth with a year-over-year increase of 10.2 percent in 1Q16.

Western Europe was the only other region to register positive revenue growth for the quarter at 1.7 percent.

The United States experienced a year-over-year decline of 6 percent. Central and Eastern Europe (CEE) and Latin America experience the largest revenue declines, at 41.6 percent and 32.3 percent, respectively.