Worldwide Server Market Revenues Increase 2.5% in Second Quarter as Infrastructure Refresh Cycle Continues, According to IDC

FRAMINGHAM, Mass. — (BUSINESS WIRE) — August 26, 2014 — According to the International Data Corporation ( IDC) Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market increased 2.5% year over year to $12.6 billion in the second quarter of 2014 (2Q14). Server unit shipments improved 1.2% year over year in 2Q14 to 2.2 million units as investments in hyperscale datacenter capacity were largely offset by consolidation, which continued to be a strategic focus for many large and small customers around the globe. Additionally, IDC continues to see signs of a server refresh cycle that is expected to lift the market going forward.

On a year-over-year basis, volume systems experienced 4.9% revenue growth. This was the fifth consecutive quarter that volume system demand increased year over year. Midrange systems also experienced growth of 11.6% year over year as technology refresh cycles began to positively impact the segment. Meanwhile, high-end enterprise systems experienced a year-over-year revenue decline of -9.8% primarily due to difficult annual comparisons in the segment.

"The server market is experiencing the beginning of a cyclical refresh cycle as systems deployed shortly after the financial crisis are retired and replaced. IDC expects this refresh cycle will continue well into 2015 and be further accelerated by Microsoft's announcement that it is ending support for Windows Server 2003 coupled with Intel's forthcoming release of the Grantley Xeon EP and a significant number of related server platform announcements," said Matt Eastwood, Group Vice President and General Manager, Enterprise Platforms at IDC. "At the same time, IDC is also seeing early stage enterprise investment in 3rd Platform workloads that leverage Webscale architectures typically seen in hyperscale environments. These workloads will drive additional interest in software-defined environments that will further enhance the need for servers deployed as the infrastructure underpinning these next generation datacenters."

Overall Server Market Standings, by Vendor

HP held the number 1 position in the worldwide server market with 25.4% factory revenue share for 2Q14. HP's 4.0% revenue growth included improving demand for x86-based ProLiant servers and continued weakness in Itanium-based Integrity server revenue. IBM held the number 2 spot with 23.6% share for the quarter as factory revenue decreased -10.2% compared to 2Q13. Demand for IBM's Power -based systems declined sharply year over year in advance of a significant technology refresh. Dell maintained the third position with 16.6% factory revenue market share in 2Q14 as factory revenue declined -6.5% compared to 2Q13 as Dell works to re-align its PowerEdge server business with its solutions selling strategy. Oracle and Cisco ended the quarter in a two-way statistical tie* for the number 4 position with 5.9% and 5.8% factory revenue share, respectively. Cisco's 2Q14 factory revenue increased 35.4% compared to 2Q13, gaining 1.4 points of market share. Oracle's factory revenue was up 3.9% year over year in 2Q14.

Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, Second Quarter of 2014

(Revenues are in Millions)

Vendor       2Q14 Revenue       2Q14 Market Share       2Q13 Revenue       2Q13 Market Share       2Q14/2Q13 Revenue Growth
1. HP       $3,194       25.4%       $3,071       25.0%       4.0%
2. IBM       $2,972       23.6%       $3,311       27.0%       -10.2%
3. Dell       $2,083       16.6%       $2,227       18.2%       -6.5%
4. Oracle*       $737       5.9%       $709       5.8%       3.9%
4. Cisco*       $727       5.8%       $537       4.4%       35.4%
ODM Direct       $835       6.6%       $669       5.5%       24.7%
Others       $2,021       16.1%       $1,736       14.2%       16.4%
Total       $12,570       100%       $12,261       100%       2.5%

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