@IDC: Worldwide Server Market Revenue Grew 38.6% in First Quarter 2018, Driven by Hyperscale Growth

"While various OEMs are finding success in this space, ODMs remain the primary beneficiary from the quickly growing hyper-scale server demand, now accounting for roughly a quarter of overall server market revenue and shipments", said Sanjay Medvitz, senior research analyst, Servers and Storage, IDC.

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Vendor revenue in the worldwide server market increased 38.6%, year over year to $18.8 billion during the first quarter of 2018, according to the International Data Corporation (IDC) Worldwide Quarterly Server Tracker. Worldwide server shipments increased 20.7% year over year to 2.7 million units in the first quarter of this year. The server volume demand in the first quarter is ‘again’ being driven by hyper-scale growth.

The overall server market continued to strengthen with its third consecutive quarter of double-digit growth, generating more revenue than any other first quarter on record. This historic demand for servers is driven by a market-wide enterprise refresh cycle, strong demand from cloud service providers, increased use of servers as the core building blocks for software-defined infrastructure, broad demand for newer CPUs such as Intel’s Purely platform, and growing deployments of next-generation workloads.

Hyperscale growth continued to drive server volume demand in the first quarter,” said Sanjay Medvitz, senior research analyst, Servers and Storage, IDC. “While various OEMs are finding success in this space, ODMs remain the primary beneficiary from the quickly growing hyper-scale server demand, now accounting for roughly a quarter of overall server market revenue and shipments.”

Volume server revenue increased by 41.3% to $15.9 billion, while midrange server revenue grew 31% to $1.7 billion. High-end systems grew 20.1% to $1.2 billion. Dell and HPE/New H3C Group were statistically tied* for first place in the worldwide server market with 19.1%, and 18.6% market shares respectively in 1Q18.

  • Dell – was the fastest growing server vendor among the top 5 companies, growing revenue 50.6% year over year to $3.6 billion and gaining 1.5 points of revenue share year over year on a strong performance in all major geographic regions. Dell also led the worldwide server market in terms of unit shipments, accounting for 20.6% of all units shipped during the quarter.
  • HPE/New H3C Group – revenue increased 22.6% year over year in 1Q18 to $3.5 billion. HPE’s share and year-over-year growth rate include revenues from the H3C joint venture in China that began in May of 2016; thus, the reported HPE/New H3C Group combines server revenue for both companies globally.
  • Lenovo, IBM, and Cisco – were all statistically tied* for the third position in the market with respective shares of 5.8%, 5.3%, and 5.2%.
  • The ODM Direct group of vendors – grew revenue by 57.1% (year over year) to $4.6 billion.

Average selling prices (ASPs) of servers increased during the quarter due to richer configurations and increased component costs. The increased ASPs also contributed to revenue growth.

On a geographic basis, Asia/Pacific (excluding Japan) was the fastest growing region in 1Q18 with 51.7% year-over-year revenue growth. Latin America grew 41.1%, the United States grew 40.6%, Europe, the Middle East and Africa (EMEA) grew 35.0%, Canada grew 28.3%, and Japan grew 2.9%. China grew 67.4%. Demand for x86 servers increased 41.0% in 1Q18 with $17.4 billion in revenues. Non-x86 servers grew 15.5% year over year to $1.4 billion.

IDC’s 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.

*) IDC declares a statistical tie in the worldwide server market when there is a difference of one percent or less in the share of revenues or shipments among two or more vendors.