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Server sales rose again in the fourth quarter: new reports

Peter Krass's picture

by Peter Krass on 03/18/2019
Blog Category: cloud-and-data-centers

The server market is strong. Worldwide server revenue enjoyed double-digit growth in last year’s fourth quarter, according to new figures from two market watchers.

Depending on whose numbers you prefer, server revenue in Q4:18 rose either 17.8% or 12.6%. The first figure comes from Gartner. The second, from IDC. The two define the market somewhat differently, which is why their figures also differ.

Either way, servers are a big, multi-billion-dollar business. IDC says worldwide server revenue in Q4 totaled $23.6 billion. Gartner puts it at a somewhat lower $21.9 billion.

Even better, this server market has momentum. Q4 marked the fifth consecutive month of double-digit revenue growth, according to IDC.

Unit shipments of servers in Q4 rose, too. They were up 8.5% year-on-year, according to Gartner, hitting 3.47 million units. IDC puts the quarter’s shipment growth at just 5%, for a worldwide total of nearly 3 million units.

By server vendor, Dell is number 1 with a global market share of 18.7%, according to IDC. Dell was followed closely by HPE, with a market share of 17.8%, and more distantly by IBM, with an 8.3% share.

For the full year 2018, Gartner says worldwide server revenue rose 30%, while unit shipments rose 13%. That illustrates the power of higher average selling prices (ASPs). 

A closer look

However, by server sector, Q4 revenue gains were less even, IDC says. In fact, one sector actually saw Q4 revenue decline:

> High-end servers: down 28%

> Mid-range servers: up 30%

> Volume servers: up 18%

As IDC analyst Sebastian Lagana explains, high-end server sales dropped due to decreased demand from what he calls “hyperscale companies.” But it was offset by both increased server sales to enterprises and higher ASPs.

Looking ahead, the server market looks likely to stay strong. For one, DRAM prices are dropping. In theory, that could lower server ASPs and therefore revenue. But Gartner says this price drop should actually increase revenue by encouraging customers to invest in new memory-intensive applications such as AI and analytics.

“Product managers,” says Gartner analyst Kiyomi Yamada, “should market higher-memory content servers to take advantage of DRAM oversupplies.”

Server sales could also get a boost this year, thanks to the coming end of support for two popular Microsoft server platforms: SQL Server 2008 (ending this July) and Windows Server 2008 (ending in Jan. 2020). Many customers will want to not only update their software, but also refresh and replace their aging server hardware.

For sellers of server systems and services, this could be a very good year.


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