The growth at the end of 2017 continued for the worldwide server market in the first quarter of 2018 as worldwide server revenue increased 33,4% and shipments grew 17,3% year over year, according to Gartner.
“The server market was driven by increases in spending by hyperscale as well as enterprise and midsize data centres. Enterprises and midsize businesses are in the process of investing in their on-premises and colocation infrastructure to support server replacements and growth requirements even as they continue to invest in public cloud solutions,” says Jeffrey Hewitt, research vice-president at Gartner. “Additionally, when it came to server average selling prices (ASP) increases for the quarter, one driver was the fact that DRAM prices increased due to constrained supplies.”
Regional results were mixed. North America and Asia/Pacific experienced particularly strong growth double-digit growth in revenue (34% and 47,8% respectively). In terms of shipments, North America grew 24,3% and Asia/Pacific grew 21,9%. EMEA posted strong yearly revenue growth of 32,1% while shipments increased 2,7%. Japan experienced a decline in both shipments and revenue (-5% and -7.3% respectively). Latin America experienced a decline in shipments (-1,8%), but growth in revenue (19,2%).
Dell EMC experienced 51,4% growth in the worldwide server market based on revenue in the first quarter of 2018. This growth helped widen the gap a bit between Dell EMC and Hewlett Packard Enterprise (HPE) as Dell EMC ended the quarter in the No. 1 spot with 21,5% market share, followed closely by HPE with 19,9% of the market. Inspur Electronics experienced the strongest growth in the first quarter of 2018 with 120,4% growth.
The x86 server market increased in revenue by 35.7 per cent, and shipments were up 17.5 per cent in the first quarter of 2018. The RISC/Itanium UNIX market continued to struggle with shipments down 52.8 per cent, while revenue declined 46.7 per cent.
Europe, the Middle East and Africa (EMEA)
In the first quarter of 2018, server revenue in EMEA totalled $3.7 billion, a growth of 32.1 per cent from the first quarter of 2017 (see Table 3). Server shipments totalled 517,000 units, an increase of 2.7 per cent year over year (see Table 4).
“The EMEA server market’s strong start to 2018 is largely driven by component price increases,” says Adrian O’Connell, research director at Gartner. “The cost of certain components is increasing due to supply shortages, and this is compounded by recent currency volatility increasing the figures for revenue when measured in US dollars. The very modest rate of shipment growth demonstrates the effects of system pricing.”
In revenue terms, all of the top five vendors saw strong growth in the first quarter of 2018. Hewlett Packard Enterprise (HPE) maintained the No. 1 position, but it was third-ranked Lenovo that had the strongest growth of 70 per cent. This strong growth is partly due to comparison with a weak first quarter in 2017, as Lenovo’s business has been declining since the System X acquisition. Nonetheless, it marks what the company will hope is the beginning of a turnaround in its performance in the server market.
Dell EMC saw the second strongest growth rate of the top five vendors. “Dell EMC continues to perform well in EMEA” says O’Connell, “The first quarter is usually a good quarter for Dell EMC, but it’s attained a record revenue share level in in the first quarter of 2018 and reduced the gap between itself and HPE to under 10 per cent now.”
The ongoing supply constraints in memory, which look set to continue into the second half of 2018, are clearly impacting the market and driving most of the revenue growth. Modest shipment growth rates suggest that the market demand hasn’t increased much. The very positive revenue performance, however, along with strong adoption at the start of this upgrade cycle, means it is at least a much more positive start to 2018 than we saw at the start of 2017.