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According to the International Data Corporation (IDC) Worldwide Quarterly Server Tracker, vendor revenue in the worldwide server market decreased 3,6% year-over-year to $12,4-billion in the first quarter of 2016 (1Q16).
This ended a seven quarter streak of year-over-year revenue growth as server market demand slowed due to a pause in hyperscale server deployments as well as a clear end to the enterprise refresh cycle.
Worldwide server shipments decreased 3% to 2,2-million units in 1Q16 when compared with the same year-ago period.
On a year-over-year basis, volume system revenue increased 1,8% and midrange system demand increased 8,3% in 1Q16 to $9,8-billion and $1,1-billion, respectively.
Midrange systems were helped by enterprise investment in scalable systems for virtualisation and consolidation, as well as increases in x86-based mission critical systems.
Meanwhile, 1Q16 demand for high-end systems experienced a year-over-year revenue decline of 33,4% to $1,4-billion on a difficult compare to the prior year, in which a major IBM system z upgrade drove a spike in mainframe system refresh.
“As expected, server growth slowed in the first quarter, with a clear end to the Intel-led enterprise refresh, a pause in hyperscale cloud expansion, and a very difficult year-on-year comparison in the high end of the market, coming off of a major mainframe refresh from IBM one year ago,” says Kuba Stolarski, research director: computing platforms at IDC.
“Now that the cyclical refresh has comes to an end, the market focus is shifting towards software-defined infrastructure, hybrid environment management, and next-gen IT domains such as the Internet of Things (IoT), robotics, and cognitive analytics.
“In the short term, IDC expects the second half of 2016 to re-energize hyperscale cloud infrastructure expansion with existing data centres filling out and new cloud datacenters standing up across the globe.”
Hewlett Packard Enterprise (HPE) retained the number one spot in the worldwide server market with 26,7% market share in vendor revenue for 1Q16, as revenue increased 3,5% year over year to $3,3-billion.
Dell maintained its number two position in the worldwide server market following server revenue declines of 1,8% year over year to $2,3-billion, holding 18,3% vendor revenue market share in 1Q16.
IBM retained the number three spot with 9,2% share for the quarter as revenue decreased -32,9% year-over-year to $1,1-billion in 1Q16.
IBM experienced a very difficult comparison to a strong year-ago period that had triple-digit growth for its system z mainframes.
Lenovo and Cisco tied for the number four position with 7% and 6,9% market shares, respectively. Lenovo earned $871-million in revenues following a decline of 8,6%, while Cisco’s revenues declined 4,5% year over year to $850-million.