Global Server Market Declines to $12.5B in 3Q16

Wednesday Dec 21st 2016 by Sean Michael Kerner
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Both IDC and Gartner report negative growth for the server market.

The third quarter of 2016 was not a positive one for the world's server vendors. IDC reported third quarter global server revenue came in at $12.5 billion, for a 7.0 percent year-over-year decline. Gartner, which tracks server revenues a slightly different way, reported a 5.8 percent decline from the third quarter of 2015.

Among the reasons for the decline is the continued used of virtualization.Server World Market Report

"The server market was impacted during the third quarter of 2016 by generally conservative spending plans globally," Jeffrey Hewitt, research vice president at Gartner, said in a statement.

"This was compounded by the ability of end users to leverage additional virtual machines on existing x86 servers (without new hardware) to meet their server application needs," Hewitt continued.

He added that if server vendors hope to drive the market back into a positive state, they will need to improve their value propositions to help end users justify server hardware replacements.

From IDC's perspective, cloud datacenters are helping to prop up the overall server market from an even larger decline.

"While cloud datacenter buildouts by key hyperscalers helped in part to prop up the quarterly results, the overwhelming downward trend was difficult to overcome," Kuba Stolarski, research director, Computing Platforms at IDC, said in a statement. "It remains to be seen whether hyperscale can drive enough demand to keep the market positive going into the home stretch of 2016."

Non-x86 Server Revenues Continue Slow Decline

Another key trend that has continued in recent years is the long, slow decline of non-x86 server revenues. IDC reported that non-x86 server revenue came in at $1.3 billion, for a $30.1 percent year-over-year decline.

IBM is the leading vendor of non-x86 servers with 64.3 percent revenue share.

IDC also noted that to date ARM-based server sales are making no measurable impact on the server market.

Overall, both IDC and Gartner report that Hewlett Packard Enterprise (HPE) is the current leader in the worldwide server market.

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist

if they hope to drive the market back into a positive state.
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