HP Ranked First on Server Market Standings by Vendor 1Q 2013

According to overall server market standings by vendor report released by the International Data Corporation (IDC), over the weekend, HP held the number one spot in first quarter of 2013 (1Q13), despite annual revenue declines of 13.5% due to weaker demand for x86-based ProLiant servers, which were challenged by competitive pricing pressure, and continued weakness in Itanium-based Integrity server revenue.

Meanwhile, factory revenue in the Europe, Middle East and Africa (EMEA) server market reached $2.8 billion in the first quarter of 2013, a decrease of 10.5% when compared with the same quarter of 2012.

The latest report from IDC reveals that in euros, revenue reached €2.1 billion, a decrease of 11.1%. Shipments reached 520,000 units, a more subdued decline of 5.7%. 1Q13 was the sixth consecutive quarter since 4Q11 of annual revenue declines in EMEA, after a period of growth during 2010 and early 2011, when European organizations resumed the investments in infrastructure that had been postponed during the recession of 2009.

x86 server revenue declined 1.5% year on year in 1Q13, while non-x86 server revenue declined 34.8%. x86 server sales reached 80.4% of the total in EMEA for the first time, confirming the irreversible dominance of industry standard technologies.

Volume servers in 1Q13 were down 3.4% year on year, while midrange and high-end servers declined 14.6% and 33.3% respectively.

Whereas 1Q13 was the sixth quarter of declines for volume and midrange servers, and the seventh quarter for the high end, the declines in the volume area have been consistently in the single digits, unlike higher-priced servers, mostly in double-digit territory.

This trend signals that organizations are opting for lower-priced servers, a consequence of both migration to x86 and the softening of overall demand, IDC said.

"Despite product launches by major vendors and ever-improving value for money, systems based on RISC and EPIC processors, typically supporting traditional Unix environments, have struggled to keep afloat, with yearly revenue declines of around 40%+.

“Part of the spending intended to keep core business applications running is now absorbed by new integrated system offerings combining x86 and lower-end RISC/EPIC blades with storage and networking back-ends. It appears now that alongside integrated multisocket platforms built around specific workloads, such as SAP HANA appliances, the integrated system area will become the key battlefield for all enterprise system vendors that want to generate gross margins above 30%," said Giorgio Nebuloni, research manager, Enterprise Server Group, IDC EMEA.

"The transition to x86 accelerated this quarter. In Western Europe, annual demand for x86 servers was almost flat, with revenue down 0.9% while sales of non-x86 legacy architectures dived by 35.7% year on year.

“RISC sales were particularly hit, down by 49.8% year on year, whereas mainframe evenue suffered single-digit declines of 4.8%. Big organizations in the corporate space and government are consolidating existing infrastructure using high-end x86 servers, with demand for legacy architectures at an all time low," said Beatriz Valle, senior research analyst, Enterprise Server Group, IDC EMEA.

However, IBM held the number two spot on the server market with a 22.4% share for the quarter as factory revenue decreased 23.5% compared with 1Q12. Demand for IBM's Power Systems and System z systems declined year over year.

Dell maintained the third position and was the only vendor in the top 5 to see revenue increases in the double digits, with sales growing 12.6% year on year and a 3.5 percentage point increase in market share year on year, helped by strong demand from its density optimized datacenter solutions business.

Fujitsu was in fourth place, with a slight decline of 0.5% annually, and increasing its share by 0.7 percentage points, thanks to good performance of both its PRIMERGY line of x86 systems and its BS2000/OSD family of mainframes.

Oracle was in fifth place with revenue down 32.1%, after sales of its RISC Unix line of SPARC Enterprise servers and Sun x86 line of industry standard systems both suffered losses. However, sales of the Engineered Systems family continued to grow by double digits in the region.