Worldwide Server Demand Softens Due to End-User Focus on Efficiency and Lowering Infrastructure Costs

Factory revenue in the worldwide server market decreased -6.2% year over year to $11.9 billion in the second quarter of 2013, according to research by IDC. Just like the previous quarter, server market demand continued to soften in most geographic regions.

SMB and Enterprise server customers around the world continue to focus on consolidation, virtualization, and migration initiatives aimed at increasing efficiency and lowering datacenter infrastructure costs, according to IDC. At the same time, challenging economic conditions are dampening demand for new IT projects necessary to grow the server market globally.

Dell Server Market Share Increases

IBM held the number one position in the worldwide server market with 27.9% factory revenue share in 2Q13. IBM experienced a -10.0% year-over-year decline in factory revenue losing 1.2 points of share in the quarter on soft demand for System x and Power Systems.

Dell gained 2.8 points of worldwide factory revenue share in 2Q13

HP held the number two position in the market with 25.9% factory revenue share following a -17.5% year-over-year decline in factory revenue resulting in a loss of 3.6 points of factory revenue share. HP experienced disappointing demand for x86-based ProLiant servers coupled with continued declines in HP Integrity server demand in the quarter.

Dell maintained third place with 18.8% factory revenue market share in 2Q13. Dell’s factory revenue increased 10.3% compared to 2Q12, helping Dell to gain 2.8 points of factory revenue share. Dell now holds its highest-ever server market share in any quarter.

Oracle maintained the number four position with 6.0% factory revenue share; Oracle’s 2Q13 factory revenue decreased -5.7% compared to 2Q12.

Cisco ended the quarter in the number five market position with 4.5% factory revenue share following 42.6% year-over-year revenue growth. With its highest ever market share, Cisco now holds sole possession of fifth place in the server market, breaking last quarter’s statistical tie with Fujitsu.

Cloud Drives Demand for Linux

Microsoft Windows server demand was down -5.1% year over year in 2Q13 with quarterly server hardware revenue totaling $5.8 billion representing 49.3% of overall quarterly factory revenue, up 0.5 points over the prior year’s second quarter.

Linux server demand continued to be positively impacted by cloud infrastructure deployments, as hardware revenue increased 1.5% year over year to $2.8 billion in 2Q13. Linux servers now represent 23.2% of all server revenue, up 1.8 points when compared with the second quarter of 2012.