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Gartner Says Worldwide Server Shipments Declined 0.2 Percent; Revenue Increased 5.1 Percent in Fourth Quarter of 2012

Server Shipments Grew 1.5 Percent for the Year, as Server Revenue Declined 0.6 Percent in 2012

In the fourth quarter of 2012, worldwide server shipments declined 0.2 percent year-on-year, while revenue increased 5.1 percent from the fourth quarter of 2011, according to Gartner, Inc.  For year-end results, worldwide server shipments grew 1.5 percent in 2012, and server revenue declined 0.6 percent.

“2012 was a year that definitely saw budgetary constraint which resulted in delays in x86-based server replacements in enterprise and mid-sized data centers,” said Jeffrey Hewitt, research vice president at Gartner. “Application-as-a-business data centers such as Baidu, Facebook and Google were the real drivers of significant volume growth for the year.”

“Relatively weak mainframe and RISC/Itanium Unix platform market performance kept overall revenue growth in check,” Mr. Hewitt said.

From a geographic perspective, the three highest growth rates were shown by North America (5.5 percent), Asia/Pacific (3.4 percent) and Latin America (0.2 percent) in terms of unit shipments. These were the only regions to experience an increase in shipments. These three regions grew at a rate of 16.3, 15.5 and 6 percent respectively.

IBM extended its lead in the worldwide server market based on revenue in the fourth quarter of 2012 (see Table 1). In the fourth quarter, IBM’s server revenue reached $5.1 billion in the fourth quarter of 2012 to increase its global market share to 34.9 percent. This was up from 33.7 percent market share in the fourth quarter in 2011.

Three of the top five global server vendors experienced revenue growth in the fourth quarter of 2012, with IBM showing the strongest growth rate of 8.9 percent, while Oracle had the steepest revenue decline of 18 percent.

Table 1
Worldwide: Server Vendor Revenue Estimates, 4Q12 (U.S. Dollars)

Company

4Q12

Revenue

4Q12 Market Share (%)

4Q11

Revenue

4Q11 Market Share (%)

4Q12-4Q11 Growth (%)

IBM

5,097,759,610

34.9

4,682,403,526

33.7

8.9

HP

3,620,601,066

24.8

3,744,672,591

26.9

-3.3

Dell

2,084,634,094

14.3

2,060,795,399

14.8

1.2

Oracle

603,030,654

4.1

735,403,237

5.3

-18.0

Fujitsu

541,010,171

3.7

498,052,547

3.6

8.6

Other Vendors

2,673,589,171

18.3

2,192,866,804

15.8

21.9

Total

14,620,624,767

100.0

13,914,194,104

100.0

5.1

Source: Gartner (February 2013)

In server shipments, HP remained the worldwide leader for the fourth quarter of 2012 (see Table 2), as it accounted for 26.5 percent of the market. HP’s shipments declined 5.9 percent. The ProLiant brand remains as HP’s significant driver of server unit volume.

Of the top five vendors in server shipments worldwide, Cisco was the only vendor to experience an increase in shipments in the fourth quarter of 2012. Cisco’s worldwide server shipments increased 40.9 percent in the quarter.

The results for the quarter were centered around x86 server demand which increased in shipments by 0.2 percent and revenue by 6.6 percent for the fourth quarter of 2011.

Table 2
Worldwide: Server Vendor Shipments Estimates, 4Q12 (Units)

Company

4Q12

Shipments

4Q12 Market Share (%)

4Q11

Shipments

4Q11 Market Share (%)

4Q12-4Q11 Growth (%)

HP

663,598

26.5

704,853

28.1

-5.9

Dell

532,890

21.3

573,125

22.9

-7.0

IBM

291,328

11.6

329,232

13.1

-11.5

Fujitsu

69,853

2.8

69,918

2.8

-0.1

Cisco

63,342

2.5

44,942

1.8

40.9

Other Vendors

879,711

35.2

783,833

31.3

12.2

Total

2,500,722

100.0

2,505,904

100.0

-0.2

Source: Gartner (February 2013)

Full Year 2012 Server Market Results

The year of 2012 demonstrated server revenue growth in spite of relative softness in some regions—most notably Western Europe. These results were fueled primarily by x86 servers which are the predominant platform used for large scale data center build outs, particularly in North America, while emerging regions such as Asia/Pacific and Latin America also added to the growth for the year.

Blade servers posted a revenue increase of 3.2 percent but a shipment decline of 3.8 percent for the year. HP was the 2012 leader with blades with 43.9 percent shipment share. IBM was in second place at 18.4 percent. Cisco grew to 12.5 percent shipment share for the year to end in third place.

The outlook for 2013 suggests that modest growth will continue. These increases continue to be buffered by the use of x86 server virtualization to consolidate physical machines as they are replaced. Some replacements are likely to begin in the enterprise segment as servers continue to age and economies improve.

EMEA 4Q12 Results

In Europe, the Middle East and Africa (EMEA), server shipments totaled nearly 630,000 units in the fourth quarter of 2012, a decrease of 10.4 percent from the same period last year (see Table 3). Server revenue totaled $3.8 billion in the quarter, a decline of 7.4 percent year-on-year (see Table 4).

“EMEA was once again the weak spot for global server sales,” said Adrian O’Connell, research director at Gartner. “Each of the three EMEA sub-regions saw revenue contract with Western Europe declining 7.9 percent, Eastern Europe 7.3 percent and the Middle East and Africa region down 3.7 percent. Without the strong growth of the hyperscale segment that is benefiting the North American markets, or the continued macroeconomic growth of emerging regions in Asia/Pacific, EMEA is more exposed to the global weakness of enterprise spending on server infrastructure.”

The revenue in the x86 server segment in EMEA declined 3.6 percent in the fourth quarter of 2012, and the RISC/Itanium UNIX revenue segment fell 31.7 percent year-on-year. The Other CPU segment was the only segment to grow in the fourth quarter.

Each of the top five server vendors in EMEA, with the exception of Fujitsu, had revenue and shipment declines. The technology segments’ figures show a dramatic bifurcation in the market with the vendors most exposed to the UNIX segment facing real challenges. The Other CPU segment was predominantly driven by IBM’s mainframe refresh, but even this high-end strength was not enough to compensate for the weakness elsewhere.

“The fourth quarter 2012 in EMEA ended another poor year for the market with revenue levels falling to a level lower than those in the fourth quarter of 2009,” said Mr. O’Connell. “This year is likely to be more positive, but it will remain a fiercely competitive environment. The vendors most exposed to declining high-end segments will face the biggest challenges.”

Table 3

EMEA: Server Vendor Shipment Estimates, 4Q12 (Units)

Vendor

4Q12

Shipments

4Q12 Market

Share (%)

4Q11

Shipments

4Q11 Market

Share (%)

4Q12-4Q11

Growth (%)

HP

247,613

39.4

           290,194

41.3

-14.7

Dell

           125,762

20.0

           134,684

19.2

-6.6

IBM

             82,803

13.2

             97,601

13.9

-15.2

Fujitsu

             37,611

6.0

             36,023

5.1

4.4

Cisco

             13,816

2.2

             11,580

1.6

19.3

Other Vendors

           121,447

19.3

           131,838

18.8

-7.9

Total

           629,052

100.0

           701,920

100.0

-10.4

Source: Gartner (February 2013)

Table 4

EMEA: Server Vendor Revenue Estimates, 4Q12 (Millions of US Dollars)

Vendor

4Q12

Revenue

4Q12 Market

Share (%)

4Q11

Revenue

4Q11 Market

Share (%)

4Q12-4Q11

Growth (%)

HP

  1,251,104,552

32.9

  1,394,256,341

34.0

-10.3

IBM

  1,244,617,164

32.7

  1,274,476,789

31.0

-2.3

Dell

     467,717,300

12.3

     485,004,371

11.8

-3.6

Fujitsu

     246,676,881

6.5

     211,373,987

5.1

16.7

Oracle

     162,818,277

4.3

     244,889,278

6.0

-33.5

Other Vendors

     429,986,643

11.3

     496,304,972

12.1

-13.4

Total

  3,802,920,816

100.0

  4,106,305,738

100.0

-7.4

Source: Gartner (February 2013)

Additional information is available to subscribers of Gartner’s Servers Quarterly Statistics Worldwide program. This program provides worldwide market size and share data by vendor revenue and unit shipments. Segments include: region, vendor, vendor brand, sub brand, CPU type, CPU group, Max CPU, platform, price band, operating systems and distribution channels.

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