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Worldwide Server Market Revenue Declines 7.0% in the Third Quarter Amidst Softened Enterprise Demand, According to IDCAccording to the International Data Corporation (IDC) Worldwide Quarterly Server Tracker, vendor revenue in the worldwide server market declined 7.0% year over year to $12.5 billion in the third quarter of 2016 (3Q16). Overall server market growth had recently slowed in part due to a slowdown in hyperscale datacenter growth and continued drag from declining high-end server sales. In addition, the robust enterprise refresh cycle of 2015 has created difficult comparisons in 2016 to the prior year's quarterly results. Worldwide server shipments decreased 4.6% to 2.38 million units in 3Q16 when compared with the same year-ago period. On a year-over-year basis, volume and midrange system revenue decreased 4.9% and 4.1% in 3Q16 to $10.3 billion and $1.1 billion, respectively. Server demand across enterprise portfolios was soft for the quarter. Meanwhile, 3Q16 demand for high-end systems experienced a year-over-year revenue decline of 25.0% to $1.1 billion. IDC (News - Alert) expects continued long-term secular declines in high-end system revenue. "The server market suffered a difficult quarter as previously healthy volume server growth faltered, suggesting that weakness in enterprise demand was more pronounced than expected," said Kuba Stolarski, research director, Computing Platforms at IDC. "While cloud datacenter buildouts by key hyperscalers helped in part to prop up the quarterly results, the overwhelming downward trend was difficult to overcome. It remains to be seen whether hyperscale can drive enough demand to keep the market positive going into the home stretch of 2016."
Overall Server Market Standings, by Vendor Group
* Note: IDC declares a statistical tie in the worldwide server market when there is a difference of one percent or less in the vendor revenue shares among two or more vendors. In addition to the table above, an interactive graphic showing worldwide market share (based on revenue) for the top 5 server vendors over the previous five quarters is available here. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com. "Other than Cisco, all major USA-based vendors experienced significant global revenue declines year over year, while many international and smaller suppliers were able to find areas of growth," said Lloyd Cohen, research director, Computing Platforms at IDC. "As large enterprise accounts slowed their demand for servers, small businesses and start-ups continued to grow their IT portfolios via non-traditional channels with innovative supply chain strategies. It will be interesting to see how this segment develops over time."
Top Server Market Findings Demand for x86 servers weakened in 3Q16 with revenues decreasing 3.1% year over year in the quarter to $11.2 billion worldwide, while unit shipments decreased 4.3% to 2.36 million servers. x86 average selling prices (ASPs) increased by 1.3% year over year. HPE led the x86 server market with 27.2% revenue share based on a year-over-year decline of 12.9% in x86 revenue. Dell Technologies retained second place, securing 20.0% revenue share following an 8.7% year-over-year revenue decline. Non-x86 servers experienced a revenue decline of 30.1% year over year to $1.3 billion, representing 10.8% of quarterly server revenue. IBM leads the segment with 64.3% revenue share despite a 32.9% year-over-year revenue decline. IDC also continued to track minimal revenue from ARM (News - Alert)-based server sales in 3Q16; ARM sales have yet to make an impact on the server market.
IDC's Server Taxonomy IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly unit shipments and revenues (both vendor revenue and value of shipments), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture. For more information, please contact Lidice Fernandez at 305-351-3051 or [email protected].
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