Gartner Reports Server Market Growth in 2014
In the fourth quarter of 2014, worldwide server shipments increased 4.8 per cent year over year, while revenue grew 2.2 per cent from the fourth quarter of 2013, according to Gartner, Inc. In 2014, worldwide server shipments grew 2.2 per cent, and server revenue increased 0.8 per cent.
“There were several factors that produced the strong growth in the server market in 2014,” said Jeffrey Hewitt, research vice president at Gartner. “On a worldwide basis, hyperscale data centre deployments as well as service provider installations drove the x86-based server market upward. Organisations had less unit growth impact because of the ongoing presence of physical server consolidation through x86-server virtualisation. This overall market growth developed despite declines in both mainframe and Unix platforms.”
In the fourth quarter of 2014, the regions with the highest growth rates in terms of unit shipments were the Middle East and Africa (10.7 per cent), Asia/Pacific (9.1 per cent) and North America (7.6 per cent).
HP led the worldwide server market based on revenue in the fourth quarter of 2014, but only grew 1.5 per cent year over year. The company ended the year with $3.9 billion in revenue for a total share of 27.9 per cent worldwide. IBM experienced a decline of 50.6 per cent, while Lenovo experienced strong growth of 743.4 per cent. The significant changes in IBM’s and Lenovo’s growth rates are due to the completion of the sale of IBM’s x86 server business to Lenovo in the fourth quarter. In server shipments, HP remained the worldwide leader in the fourth quarter of 2014, even as its shipments declined 11.0 per cent. HP’s revenue increase compared with its shipment decline suggests a shift to sales of servers with richer configurations and relatively higher average selling prices to continue to support server consolidation through virtualisation, in addition to a tough comparison when the company had large hyperscale deals a year ago.
Full Year 2014 Server Market Results
2014 was a relatively moderate growth year in the server market with overall increases of 2.2 per cent in shipments and 0.8 per cent in revenue. x86 servers continue to be the predominant platform used for large-scale data centre build-outs across the globe, and the growth of integrated systems, while still relatively small as an overall percentage of the hardware infrastructure market, also provided some growth contribution to the x86 server space for the year. The outlook for 2015 suggests that modest growth will continue in the server space on the whole.
EMEA 4Q14 Results
In Europe, the Middle East and Africa (EMEA), server shipments in the fourth quarter of 2014 declined 0.7 per cent, while server revenue grew 1.2 per cent, totalling $3.6 billion. In 2014, server shipments declined 2.5 per cent and server revenue grew 2.1 per cent.
“Despite considerable market pressures, the fourth-quarter server results in EMEA were unremarkable,” said Errol Rasit, research director at Gartner. “The region saw growth prospects related to installed-base refresh, big data projects and cloud computing expansion; however, political and economic instability, combined with US dollar strength, dampened market demand in EMEA.”
In the fourth quarter of 2014, HP extended its revenue share lead in EMEA with 10 per cent growth despite a 1.5 per cent decline in server shipments. HP’s strong performance in the quarter came from strong demand for modular servers, replacement demand due to the latest ninth-generation platforms, and competitive growth.
For the second consecutive quarter, Dell held the second spot in EMEA as IBM’s divestment of x86 servers to Lenovo reduced IBM’s position to third. Dell recorded a 19 per cent revenue growth. The growth was attributed to ongoing channel improvements, and strong sales execution. Dell also benefited from 13th-generation platform replacement activity.
Third-place IBM declined 57 per cent as it suffered from a tough quarter compared with a year ago when System X revenue contributed to its total.
“Without including x86 revenue, IBM’s revenue would have declined by 14 per cent in the fourth quarter of 2014,” said Mr Rasit. “The weakness in IBM’s top-line result is also due to System Z investment slowing in anticipation of the newest-generation mainframe products. After recent weak results, Power Systems’ revenue grew marginally by 0.9 per cent in the fourth quarter of 2014 in EMEA. Power Systems represents IBM’s growth strategy with key investments in PowerLinux and OpenPOWER.”
“Although revenue growth was in low single digits, and server shipments were constrained, 2014 was a year where the market in EMEA returned to consistent growth,” said Mr Rasit. “We expect 2015 will exhibit a similar pattern of growth, however, the worsening currency effects related to a strong US dollar is likely to drive price increases and restricted spending in EMEA.”
Additional information is available to clients who have access to Gartner’s Servers Quarterly Statistics. This database provides worldwide market size and share data by vendor revenue and unit shipments. Segments include: region, vendor, vendor brand, sub brand, CPU type, CPU group, Max CPU, platform, price band, operating systems and distribution channels.
