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Worldwide server revenue and shipments on a decline

PCs are not the only devices whose revenue is constantly declining. According to Gartner’s new report, servers seem to be sharing their fate. Looking at Q3 2016, there has been a 5.8 per cent decline in server revenue, compared to the same period last year, with shipments being down 2.6 per cent, as well. Cisco seems to be the only vendor experiencing a growth in revenue, while Huawei and Inspur Electronics saw a growth in shipments. HPE, Dell, Lenovo, they’ve all seen declines in revenue and shipments.  

With the exception of Eastern Europe, there has been a decline in shipments in all regions. Eastern Europe has seen a growth of 0.9 per cent. For revenue, Japan grew 1.3 per cent, the rest declined. "The server market was impacted during the third quarter of 2016 by generally conservative spending plans globally. This was compounded by the ability of end users to leverage additional virtual machines on existing x86 servers (without new hardware) to meet their server application needs," said Jeffrey Hewitt, research vice president at Gartner. 

"Server providers will need to reinvigorate and improve their value propositions to help end users justify server hardware replacements and growth, if they hope to drive the market back into a positive state." 

There was a 2.3 per cent decline in x86 server shipments, and a 1.6 per cent decline in revenue, for this quarter. Cisco was the only vendor, out of the top five, not seeing a decline in revenue. For shipments, Huawei and Inspur Electronics were the only vendors seeing any growth.  There were a total of 481,000 servers shipped in the EMEA region in Q3 2016, representing a 9.7 decline, year-on-year. 

"This is not a sudden slowdown following the UK referendum result, it is a sign of continuing weak demand across the EMEA market with very few drivers having a positive effect," said Mr O'Connell.

 "With non-x86 servers falling to less than 12 per cent of overall revenue, the market is highly exposed to the negative effects that virtualisation and external cloud services can have on lower-cost x86 platforms. EMEA is likely to remain a very challenging region for server vendors."  

Sead Fadilpašić

Sead is a freelance journalist with more than 15 years of experience in writing various types of content, from blogs, whitepapers, and reviews to ebooks, and many more, across sites including Al Jazeera Balkans, TechRadar Pro, IT Pro Portal, and CryptoNews.