The worldwide server market continued to grow through 2017 as worldwide server revenue increased 25,7% in the fourth quarter of 2017, while shipments grew 8,8% year over year, according to Gartner.
In all of 2017, worldwide server shipments grew 3,1% and server revenue increased 10,4% compared with full-year 2016.
“Server growth was driven by relatively strong economies for the quarter across the globe,” says Jeffrey Hewitt, research vice-president at Gartner. “This was a somewhat surprising quarter because the strength was exhibited in a variety of positive server shipment and revenue mixes in almost all geographies.”
Regional results were a mixed bag. North America and Asia/Pacific were particularly robust demonstrating double-digit growth in revenue (27,6% and 35,1%, respectively).
In terms of shipments, North America grew 9,7% and Asia/Pacific grew 21,2%. Europe, the Middle East and Africa (EMEA) posted strong yearly revenue growth but shipments declined. Japan grew 4,8% in revenue, but declined 5,1% in shipments. Latin America was the only region to exhibit a decline in both shipments (negative 4,7%) and revenue (negative 2,9%) in the fourth quarter of 2017.
Dell EMC and Hewlett Packard Enterprise (HPE) were neck-and-neck in the worldwide server market based on revenue in the fourth quarter of 2017.
Dell EMC ended the year in the number one spot with 19,4% market share, followed closely by HPE with 19,3% of the market. Dell EMC experienced strong growth in the quarter with 39,9% growth. HPE grew 5,5%. Inspur Electronics experienced the strongest growth in the fourth quarter of 2017 with 127,8% growth.
In server shipments, Dell EMC maintained the number one position in the fourth quarter of 2017 with 18,2% market share. Despite a decline of 12,8% in server shipments, HPE secured the second spot with 13,8% of the market.
The x86 server market increased in revenue by 23,7%, and shipments were up 8,9% in the fourth quarter of 2017.
For the full year of 2017, worldwide server shipments increased 3,1%, while revenue grew 10,4%.
“Both enterprises and hyperscale data centres produced positive results globally for the year as end users seek to implement more digital business solutions,” says Hewitt. “The outlook for 2018 suggests that modest growth will continue, with enterprise end users taking an ongoing hybrid approach to both on-premises and public cloud choices based on their server application objectives.”
In the fourth quarter of 2017, server revenue in EMEA totalled $4-billion, growing 19,9% from the fourth quarter of 2016. Server shipments totalled 547 000 units, a decline of 7,9% year over year.
“At first glance, the EMEA server market ended 2017 positively,” says Adrian O’Connell, research director at Gartner. “The main driver for the revenue growth, however, remains the increasing cost of certain components due to supply shortages, with vendors passing that cost increase on to users.”
In revenue terms, all of the top five vendors except HPE grew in the fourth quarter of 2017. HPE retained the number one position but was the only vendor to be flat year over year.
Second-ranked Dell EMC saw strong growth from the fourth quarter of 2016, but third-ranked IBM had the highest growth rate. “The EMC acquisition is continuing to drive server revenue growth for Dell EMC in EMEA, but the cyclical nature of the high-end server business currently favours IBM,” says O’Connell.
As in the third quarter of 2017, while the revenue results look positive, declining shipments tell a different story of weak underlying demand across the EMEA market.
“The higher prices due to component shortages have compounded the weak demand in EMEA as buyers reprioritise their investments to avoid the temporary price spikes where possible,” says O’Connell. “Component shortages are expected to ease as we move through 2018, and therefore, server prices will fall in 2018, but we do not expect the low demand to ease — so later in the year revenues will also reflect the ongoing weakness in EMEA.”