Server Sales Slump Continues, Gartner Says - InformationWeek
Infrastructure // PC & Servers
11:52 AM
Connect Directly
Ransomware: Latest Developments & How to Defend Against Them
Nov 01, 2017
Ransomware is one of the fastest growing types of malware, and new breeds that escalate quickly ar ...Read More>>

Server Sales Slump Continues, Gartner Says

Worldwide server revenue declines 5% in the first quarter, with Oracle as loss leader and Dell bucking the trend.

The server market ended 2012 in decline, and it didn't snap out of it in the first quarter of 2013. That's the key finding of the latest Worldwide Server Shipment report released by Gartner on Monday.

"Budgets are restricted and server infrastructure spending is clearly not the highest priority for many organizations," said Adrian O'Connell, research director at Gartner, in a statement.

Server unit shipments declined 0.7% compared to the first quarter last year, while revenue declined 5%. High-end servers, particularly those in the RISC/Itanium Unix category, suffered the biggest drop, with unit shipments off 38.8% and revenue down 35.8% from the same period last year. The two largest Unix server manufacturers, IBM and Oracle, were dragged down by the trend.

IBM's Unix server revenue was off 32.3% to $841 million on the quarter (down from $1.24 billion a year earlier). That contributed to a 13.6% slide in total server revenue for IBM to $3.01 billion from $3.49 billion in the first quarter last year. It also reduced IBM's server revenue market share to 25.5%, down from 28.0% last year, and ahead of HP, which had $2.95 billion in server revenue and 25.0% of the market in the first quarter.

[ Want more on Oracle's next-gen Unix servers? Read Oracle Sparc T5 Can't Make Sun Rise. ]

Oracle's Unix server shipments were down 60.4% to 7,459 units in the first quarter, reducing revenue in that category 38.3% to $280 million from $382 million a year earlier. The drop could be explained by anticipation of Oracle's late-first-quarter release of Sparc T5 and M5 servers, the replacements for earlier-generation T4 and M9000 servers. Oracle's total server revenue across all categories dropped 27.2% to $538 million, down from $739 million in the first quarter of 2012.

Chart: Worldwide: Server Vendoe Revenue Estimates, 1Q13 (U.S. Dollars) - Gartner

Shipments were flat for x86 servers at 2.29 million units, while revenue increased 1.8% to $9.11 billion from $8.95 billion in the first quarter of 2012. These servers are the backbone of distributed systems based on commodity hardware (such as Hadoop and NoSQL deployments) that are displacing high-end server sales. Indeed, the "self-build" category within this segment saw a 34.7% increase in unit shipments and a 35.4% increase in revenue to $434 million for the quarter.

Dell's focus on x86 servers helped it outperform competitors that rely on the RISC/Itanium sales. Dell shipments increased 2.6% to 516,355, up from 503,450 a year earlier. Revenue increased 14.4% to $2.12 billion, up from $1.85 billion in the first quarter of 2012.

Looking at results by region, conditions were weakest in Europe, the Middle East and Africa (EMEA), where units were down 6.8% and revenue declined 9.6%. The Asia/Pacific region and the United States had shipment and revenue increases of 7% and 1.7%, respectively. The increases were not enough to offset declines in all other geographies.

"The reality for server vendors is that spending levels are very low and there is severe weakness in the high-end segment," O'Connell said. "The outlook for 2013 remains challenging."

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
User Rank: Strategist
5/29/2013 | 1:48:16 AM
re: Server Sales Slump Continues, Gartner Says
Dell began a shift toward cloud server production in 2009-2010 that is paying off for it. It may need to complete its transition to a private company, however, in order to roll with the punches that are afflicting server providers. IBM and other proprietary server makers are going to be hard hit by the inevitable shift to more commodity x86, cloud server use. Charlie Babcock, InformationWeek
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of IT Report
In today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll