HP, Cisco Benefit Despite Stagnant Server Market

Data centre, servers © Dario Lo Presti Shutterstock 2012

Gartner report reveals that HP and Cisco are the only top-five server vendors to see their revenues grow

The global server market remains relatively stagnant, with shipments growing but revenues falling in the third quarter.

This is according to Gartner analysts, who also revealed that Hewlett-Packard continues to lead the market.

Slow Growth

HP and Cisco Systems were the only top-five vendors to see their revenues grow during the quarter, while HP and Huawei Technologies were the only ones to see the number of shipments increase, according to numbers released by Gartner 4 December.

server_virtualizationOverall, global server revenues reached more than $12.3 billion (£7.5bn) in the third quarter, a 2.1 percent decline from the same period in 2012. Total shipments hit more than 2.5 million units, a 1.9 percent jump over the third quarter last year.

“The worldwide server market remains in a relatively weak performance mode as we move through the second half of the year,” Jeffrey Hewitt, research vice president at Gartner, said in a statement. “x86 servers maintained low levels of growth at 2.1 percent in units year-on-year and 4.4 percent in revenue. RISC/Itanium Unix servers continued to decline at 4.5 percent and 31 percent in vendor revenue compared to the same quarter last year. The ‘other’ CPU category, which is primarily mainframes, showed an increase of 7.8 percent.”

Gartner’s numbers came out a day after a study by TheInfoPro – a service of 451 Research – indicated that in 2013 and 2014, enterprise investment in servers, including x86 systems, would slow as businesses turn their attention to software. Many businesses had invested a lot of money in server refresh efforts over the past few years in an effort to leverage virtualisation technology and lay the groundwork for cloud-ready, software-defined data centres.

Much of that infrastructure work has been done, and now IT administrators are looking at software to handle such work as management, configuration and automation, as well as cloud platform solutions, according to TheInfoPro officials.

The slowdown on hardware spending “is an artifact of server virtualisation,” Peter ffoulkes, research director for servers and virtualisation at the TheInfoPro, told eWEEK. “It’s freeing [IT administrators] up to look at other things.”

Market Stats

According to Gartner’s numbers, HP grew its leading revenue market share to 27.6 percent and generated more than $3.4 billion (£2.1bn) in revenue in the third quarter, a 2.2 percent increase over the same period in 2012. Cisco, No. 4 on the list, saw revenues driven by its Unified Computing System (UCS) platform jump 42.7 percent, to almost $600 million (£366m). The other vendors in the top five – IBM, in second, Dell (third) and Oracle (fifth) – saw revenue declines between 3.5 percent and 18.9 percent.

In terms of shipments, HP moved 669,103 units, 5.4 percent more than in the third quarter last year. Huawei, the massive Chinese tech vendor, was the only other company in the top five to see server shipments grow. Huawei moved 69,573, a 202.1 percent jump over last year. Dell, IBM and Fujitsu saw the number of unit shipments fall between 10.1 percent and 28 percent.

Blade server shipments dropped 1.5 percent, though revenues increase 3 percent. Rack-optimised systems saw shipments grow 2.6 percent, but revenues fall 1.8 percent.

According to Gartner’s Hewitt, only three regions globally showed revenue growth – the Middle East and Africa (EMEA) at 12.1 percent, Canada at 6.5 percent and the United States at 0.9 percent. In unit shipments, EMEA showed the largest jump, at 13 percent over the third quarter in 2012.

Think you are a virtualisation guru? Try our quiz!

Originally published on eWeek.