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Gartner: Server Market Reverses Downward Trend

All major vendors report higher server revenue, except for IBM, due to sale of x86 business to Lenovo

The 11 consecutive quarters of declining server sales continued to fade in the rear-view mirror, as server revenues rose 7.5 percent in the third quarter, while server shipments rose 9.2 percent, Gartner said in its latest report on the server market.

Server sales also rose in the second quarter, albeit more modestly, establishing a growth trend.

“The third quarter of 2015 produced growth on a global level with mixed results by region,” Jeffrey Hewitt, research vice president at Gartner, said in a statement. “All regions showed growth in both shipments and vendor revenue, except for Eastern Europe, Japan, and Latin America, which posted revenue declines of 5.8 percent, 11.7 percent, and 24.2 percent, respectively, for the period. Currency exchange rates are one of the main reasons for the disparity in regional server market performance.”

By chalking the soft numbers in underperforming regions to currency fluctuations, Hewitt provides further reassurance for server vendors of the market’s overall strength. All the major vendors had revenue increases in the quarter, except for IBM.

IBM’s share decreased 42 percent from 18.5 percent to 9.8 percent of the global market, mostly due to the sale of its x86 server business to Lenovo. Lenovo picked up the difference, increasing from 1.3 to 7.9 percent. The increase makes Lenovo the world’s fourth largest server vendor, passing Cisco.

IBM actually posted a small gain in share of the market it remained active in: a small drop in RISC products and a significant jump in mainframe sales. The market as a whole experienced the decrease in the RISC/Itanium Unix segment and increase in “other” CPU, including mainframe sales.

The global server market rebounded in Q2 2014 following 10 quarters of declining revenues and 11 of declining shipments. Third quarter 2015 revenues were actually down slightly from the second quarter despite increased shipments, as server prices continue to fall. The market also saw a slight decrease in revenues and a slight increase in shipments from Q2 to Q3 2014.

Global server sales reached almost $51 billion in 2014, according to IDC, and they appear likely to approach $55 billion this year.

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