HP has overtaken IBM to become the world’s biggest server vendor in terms of revenue in the third quarter this year, according to new figures from IDC, a market research company. This follows recent and indirectly related research by Forrester that identified HP as the top private cloud vendor in the market right now.
That HP has regained the top spot in the server market is interesting for two reasons. The first is that it has managed to do this in a market that has declined by 3.7 percent this year. The other is that it has also managed to do it at a time when it is going through an identity crisis that has placed a question mark over its future direction.
Its CEO, Meg Whitman, who took over the reins two years ago, promised to give it a new sense of purpose and move it away from its dependency on the PC market. At the time, it had also a large business in server development and sales. But with diminished corporate IT spending during the financial crisis, HP also took a hit in is server business.
The difficulty facing the server market is underlined in this recent set of International Data Corporation (IDC) figures, which were published in its Worldwide Quarterly Server Tracker.
It shows a market that has shrunk for the third consecutive quarter to $12.1 billion as enterprises wait for the next refresh cycle, which is expected to take place in the first quarter of next year. This translated into 2.3 million units worldwide shipped over the quarter. Matt Eastwood, IDC vice president, noted:
Worldwide server revenue declined in all major geographic regions including Americas, EMEA, and Asia/Pacific in the third quarter. The market was impacted by a steady transition from 2nd Platform to 3rd Platform workload demand coupled with particularly weak sales of Unix servers, which served to further dampen the market."
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In terms of overall standing, HP took the lion’s share of the market with 28 percent. It is trailed by IBM, which only managed to take 23.4 percent of the market after a decline of 19.4 percent in year-over-year sales, representing a 4.5 percent decline in market share.
Apart from HP and IBM, Dell’s factory revenue decreased by 6 percent, while Cisco and Oracle ended up with 5.0 percent and 4.1 percent, respectively.
One of the other interesting points that has emerged from this set of figures is the impact cloud computing, big data, and Web 2.0 environments are having on the market.
In Forrester Wave for Private Cloud Computing this week, we saw that while 33 percent of enterprises have moved to private clouds, another 55 percent expect to do so in the next 12 months.
We have also noted the inimitable development of Web 2.0 environments and the drive towards better user experiences, which is putting ever-greater demands on enterprise computing power.
On top of this, there is also the rush towards big data software and analytics as enterprises struggle to find customer insights in their data.
The result is the growth in what IDC describes as Original Design Manufacturers (ODMs) that are selling complete and partial subsystems into the market. In response to that, IDC is now analyzing these shipments separately for the first time. Until now, ODMs have fallen under the wider, general category of "Others."
The ODM category has exploded over the past year with demand in this quarter growing by 45 percent to $783 million, and unit shipments up 30 percent to 325,685 servers. ODM Direct servers now represent 6.5 percent of all server revenue and 14.4 percent of all server shipments. Over the quarter, 79.6 percent of all ODM Direct server revenue was generated in the US through sales to Google, Amazon, Facebook and Rackspace.
However, it was x86 servers that continued to push the market, with revenues growing 2.8 percent in the quarter to $9.5 billion, and HP cornering the market with 32 percent of the market with growth of 7.8 percent in revenue, or market growth of 1.5 percent.
While the news here is good for HP and less so for IBM, it is likely that all this will change by the middle of next year as the server refresh cycle kicks in. Interesting times ahead.
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