Server market revenue drops 7.7 per cent in Q1

Revenue in the global server market fell by 7.7 per cent in the first quarter of 2013 compared to the same time last year, with $10.9 billion (£7.2 billion) brought in over the three-month period, according to the latest IDC report.

The quarterly decline is the sixth in a row for the server sector, as demand continues to weaken. Shipments of server units dropped 3.9 per cent to 1.9 million units.

Volume systems also saw a revenue drop of 3.1 per cent, while mid-range and high-end systems saw much more substantial declines of 18.3 per cent and 17.1 per cent respectively.

HP remained in top position with a 26.9 per cent market share, but this is down from its 29.2 per cent share in the first quarter of 2012. Revenue dropped 14.8 per cent from $3.46 billion (£2.28 billion) to $2.95 billion (£1.94 billion).

IBM is not far behind in second place, with a 25.5 per cent market share, a drop of 1.7 percentage points. Revenue fell 13.4 per cent from $3.22 billion (£2.12 billion) to $2.79 billion (£1.84 billion).

Dell came in third and is one of the few success stories of the first quarter, with market share growing from 15.5 per cent to 18.5 per cent, and revenue also growing 10.1 per cent from $1.84 billion (£1.21 billion) to $2.03 billion (£1.34 billion).

Fujitsu, Oracle and Cisco shared joint fourth place, with revenue all around the half billion dollar mark. Fujitsu saw declines of 8.5 per cent, while Oracle saw the worst drops of 26.2 per cent. Cisco, however, appears to be benefiting from other companies' losses, with a massive 34.9 per cent increase in revenue.

“Customer demand for new servers is being impacted by ongoing server consolidation, technology transitions, and challenging macroeconomic conditions across the globe. In fact, every geographic region except Asia/Pacific experienced revenue contraction in the quarter,” said Matt Eastwood, Group Vice President and General Manager of Enterprise Platforms at IDC.

“It is clear that challenging market conditions are increasing the competitive dynamics for server market share globally, particularly since compute represents a critical element of larger IT transformations that continue to reshape broader enterprise IT market opportunities.”