Worldwide Server Shipments and Revenue Continue Decline in 1Q17 as Cloud Impact Grows

by Sean Michael Kerner

Both IDC and Gartner report a downturn in the global server market.

2017 hasn't been a good year so far for the server market. Analyst firms Gartner and IDC have issued their respective first quarter 2017 global server reports, showing a decline in both revenue and shipments.

Gartner reported that in the first quarter of 2017, worldwide server revenue declined 4.5 percent year over Windows Serveryear to $12.5 billion. IDC's calculations are a little different but show a similar trend, with server revenue down 4.6 percent to $11.8 billion.

The decline in revenue is not entirely tied to a decline in server shipments, according to the analyst firms. Gartner reported that server shipments declined 4.2 percent from the first quarter of 2016. In contrast, IDC reported that global server shipments actually grew by 1.4 percent to 2.21 million units.

What does seem to be clear is the continued negative impact that cloud is having on server revenues.

"Although purchases in the hyperscale data center segment have been increasing, the enterprise and SMB segments remain constrained as end users in these segments accommodate their increased application requirements through virtualization and consider cloud alternatives," Jeffrey Hewitt, research vice president at Gartner, said in a statement.

Kuba Stolarski, research director, Computing Platforms at IDC, stated that in his view, the server market continues to struggle to find growth.

"As the market prepares for the switch to Intel's Skylake this year, we may be witnessing a shift in how workloads are deployed in the future, and what architectural choices will be made around modularity, operating environments, software, and cloud services," Stolarski stated.

"As indicated by this quarter's results, one large server customer appears to be betting on a major transition to cloud services, as it alone accounted for approximately a quarter of a million servers deployed in the first quarter," Stolarski continued.

Both IDC and Gartner agree that Hewlett Packard Enterprise (HPE) is now the largest server vendor in the world in terms of revenue, followed by Dell EMC in second place. In terms of servers shipped, however, Dell EMC edged out HPE to hold the top spot.

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

This article was originally published on Wednesday Jun 7th 2017
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