Server revenues slow in 2016 after strong 2015 upgrade cycle

A new report from IDC has shed light on the way server revenues have decreased despite an increase in global server sales.

New research has revealed that despite increased server sales, revenue has continued to decline for the companies responsible for manufacturing and shipping servers worldwide.

The analyst firm IDC brought this information to light in its new “Worldwide Quarterly Server Tracker” report, which covered server market share and revenue from April to June 2016.

In the report, the firm noted how a strong 2015 upgrade cycle was likely the cause of a dull year in 2016, saying: “Overall server market growth has recently slowed in part due to a pause in hyperspace datacentre expansion and is feeling the continued drag from high-end server sale declines.”

High-end server sales were hit the hardest by the impact of large purchases in 2015, according to IDC. The firm says that these servers “experienced a year-over-year revenue decline of 31.4 per cent to $1.6 billion on a difficult compare to the prior year.” IDC believes that this trend will likely continue for the long term due to many companies opting for midrange systems instead.

In its report, the firm said: “Midrange systems were helped by enterprise investment in scalable systems for virtualisation and consolidation, as well as increases in x86-based mission critical systems.”

IDC also noted that “volume systems” or low-end servers have “increased 5.3 per cent and midrange system demand increased 12.7 per cent in 2Q16 to $10.6 billion and $1.3 billion, respectively.”

The firm listed HPE, Dell, IBM, Lenovo and Cisco as the top 5 worldwide vendors of server systems during the second quarter of 2016. IDC also suggested that falling server revenue could have been the result of aggressive companies choosing to drop their prices.

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Anthony currently resides in South Korea where he teaches and experiences Korean technological advances first hand.