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Gartner: server sales remained weak in the second quarter

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September 4, 2012

Market research firm Gartner says that global server sales remained weak during the year's second quarter.

Gartner added that revenues were off 2.9 percent to $12.86 billion against a slight 1.4 percent increase to 2.37 million servers shipped to customers between April and June of this year.

Overall, the x86 server market continues to dominate in terms of sales volumes, helped along by Intel's Xeon E5 refresh in March, April and May, plus AMD's launch of its Opteron 4200s and 6200 CPUs in November 2011.

On average, the x86 segment was relatively healthy despite the world's economic challenges. Gartner's researchers say that x86 server makers shipped 2.33 million units in the second quarter, a 1.8 percent increase compared to the year-ago period.

Thanks to customized configurations necessary to support server virtualization options, x86 server revenues across all makers rose by 5.6 percent to $9.19 billion.

In terms of sales, Hewlett-Packard was the number one x86 system vendor, with $3.2 billion in sales, but falling six-tenths of a percentage point compared to the same period in 2011.

For its part, Dell ranked second and grew both shipments and revenues, in contrast to both HP and IBM. To be fair, Dell only sells x86 servers, and piled up just under $2 billion in sales pushing its PowerEdge products in the quarter. It's not a coincidence that Dell got the jump on both HP and IBM in getting Xeon E5 servers out the door. We'll see if Dell's market share gains hold in the third and fourth quarters.

IBM delivered just $1.24 billion in sales, and perhaps its x86 sales were stalled by the launch of its Flex System modular servers, very much like Cisco Systems' Unified Computing Systems in April, which didn't start shipping until mid-May.

Most notably, Cisco has surpassed Oracle in terms of aggregate x86 servers sold, with a 54.5 percent growth rate to $376.3 million in sales in the second quarter.

For its part, Lenovo broke into the top five shippers category with 52,409 servers shipped, up 44.7 percent year-on-year. It may not be long before Lenovo and Cisco beat both Oracle and Fujitsu out of the top five server vendor rankings in the x86 segment.

Overall, Oracle had $316.1 million in sales of x86 server revenues in the second quarter, and Cisco has already jumped ahead of Oracle and therefore pushed Fujitsu out of the top five in terms of server revenues.

Notably, Oracle's x86 server sales, driven by sales of Exadata and Exalogic clusters and Exalogic analytics servers, rose by 19.2 percent.

While all of this is happening, Gartner cases the Unix market each quarter in addition to dicing and slicing the x86 market, and unlike IDC, Gartner doesn't try to categorize server revenues by the primary operating system that will eventually be installed on it if it has not already been pre-installed.

Overall, Unix systems based on RISC or Itanium CPUs accounted for about $2.15 billion in revenues in the second quarter, down 17.9 percent.

However, IBM is still the dominant vendor in the Unix server segment. Big Blue has to be a little bit dismayed that Unix sales have collapsed so much in recent years even if pressure from Windows and Linux means it cannot come as a surprise.

Still, IBM was able to bring in $1.2 billion in Power Systems sales running its proprietary AIX Unix OS in the quarter, only 4 percent less than in 2011.

Oracle was the number two Unix system player, with $456.7 million in overall sales, but its Unix sales declined by almost 32 percent. Some of that is because the upcoming Sparc T5 launch is stalling sales to a degree, and another reason is that Oracle is focusing on all of those Exa machines.

HP was the number three Unix vendor, with $412.8 million in sales in the quarter, down 29.1 percent, in part due to the impending "Poulson" Itanium 9500 launch and in part due to the fallout from Oracle's decision in March 2010 to not put its database, middleware, and application software on those Itanium 9500 chips.

When you add it all up, HP had $3.75 billion in combined server sales in the second quarter after a 5.1 percent drop, and IBM fell 7.8 percent to just under $3.5 billion.

Dell's sales were up 5.1 percent to $1.98 billion, and Oracle's combined Sparc and x86 server sales came to $772.8 million, down 17.5 percent.

Fujitsu rounded out the top five, with $494.2 million in revenues, but stomached a 41 percent drop against a particularly tough compare.

In August 2011, Fujitsu was installing the K supercomputer at the Riken lab for the Japanese government and recognized the revenue from the 10.5 petaflops machine largely in the year-ago period. Other vendors accounted for $2.37 billion in sales, up 28.4 percent and bucking the general trend in the overall market.

In the U.S., server shipments were up 8.4 percent and revenues were up 6.5 percent according to Gartner. Considering that everyone knows mainframe and Unix systems are being refreshed in the second half, it is a wonder that revenues were able to grow at all in the U.S.

Gartner added that in the EMEA region, server shipments declined 4.4 percent to 585,000 units and revenues were off 11.6 percent to $3.26 billion. HP is the dominant vendor by a sizable margin in Europe, with $1.21 billion in sales driven by 243,285 servers.

IBM's server revenues in EMEA were off 21.2 percent, thanks to impending Power Systems and mainframe launches, falling to $843 million with a mere 56,637 units shipped.

Overall, Dell was third in Europe, with $404.8 million in revenues, up 5.6 percent, against 112,997 servers, up 5.7 percent for 2011. Oracle posted $221.8 million in revenues in EMEA, off 22.8 percent and Fujitsu booked $170 milion in sales, down 10.2 percent.

Other vendors made up a tiny $404 million slice of the server market, so you can see where Lenovo and Cisco are not getting much traction for now.

On average, server sales in Japan and Latin America were also off in the second quarter, Gartner said, and sales in the Asia/Pacific Rim region were up less than 0.3 percent.

Source: Gartner Market Research.

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