Server market declines as shift to cloud gathers pace

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Server market declines as shift to cloud gathers pace

HP takes number one spot worldwide.

Server revenue worldwide continues to decline as the market shifts to cloud computing and away from traditional platforms, analysts say.

Gartner figures point to a modest 2.1 percent revenue decline on shipments growing by 1.9 per cent for the third quarter of this year. IDC meanwhile saw a larger, 3.7 percent decline in revenue in the same period, with flat shipments of 2.3 million units.

Weak sales of UNIX servers is seen as the reason for the revenue drop by IDC. Gartner also points to declining UNIX revenue and said that Intel x86 architecture server shipments were flat in the third quarter of this year, with just 2.1 percent growth.

This quarter, IDC has introduced metrics for a new category of server vendors who target large-scale cloud environments, called Original Design Manufacturers or ODMs, which the analysts say are doing well in the current climate.

Such vendors sell both complete systems, as well as partial ones, that are fully assembled by channel integrators, with sales going primarily to Google, Amazon, Facebook and Rackspace.

Using market data going back to the first quarter of 2008, IDC notes this category is seeing substantial growth: for the third quarter, demand jumped by 45.2 percent year on year, the analysts say.

ODM shipments were up 30.7 pe cent to 325,685 servers, taking 6.5 pecent of all revenue in the market and accounting for 14.4 percent of all units.

IDC analyst Kuba Stolarski says ODM vendors are capturing the majority of hypescale demand for homogenous environments and are well-positioned for continued "3rd platform" infrastructure growth.

"Each year, ODM Direct growth is accelerating as large, established hyperscale customers begin new expansion phases of their infrastructure footprints, and as the customer base for ODMs continues to broaden," Stolarski said.


Both analyst firms rank HP as the top server vendor with 27.6 percent market share in the third quarter of this year. HP is one ofjust  two firms in the top-five list registering revenue growth for that period, along with Cisco which saw an increase of of over 42 percent on the back of strong blade server sales.

In terms of shipments, Chinese mega corporation Huawei shifted a whopping 202.1 per centmore servers in the last quarter, Gartner said. Its market share worldwide is still modest at 2.8 percent, but it has surpassed that of Fujitsu, which saw a 10.1 percent drop in shipments in the last quarter.


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