Server factory revenue increases 3.1% in Q4 2012
Server market is still showing signs of lumpiness despite the revenue growth
Factory revenue in the worldwide server market increased 3.1% year over year to $14.6 billion in the fourth quarter of 2012 (4Q12), according to the International Data Corporation (IDC) Worldwide Quarterly Server Tracker.
"Despite experiencing the first quarterly growth in factory revenue in over a year, the server market continued to show signs of lumpiness in the fourth quarter," said Matt Eastwood, group vice president and general manager, Enterprise Platforms at IDC. "IDC forecasted that server demand would begin to improve in the second half of 2012 following a number of critical product refreshes which occurred in the first half of the year. While this did happen in the fourth quarter, market demand was uneven with the US, Asia/Pacific and Latin America all experiencing sharp growth, while demand in all other regions remained soft. Average selling prices for servers increased sharply in the quarter as large and small enterprises continued to invest heavily in new server capacity to drive additional consolidation and virtualisation initiatives."
This was the first quarterly increase of factory revenue in five quarters. Worldwide server shipments decreased 3.9% to 2.1 million units in 4Q12 when compared with the same period in 2011. For the full year 2012, worldwide server revenue decreased 1.9% to $51.3 billion when compared to 2011, while worldwide unit shipments decreased 1.5% year over year to 8.1 million units.
On a year-over-year basis, volume systems and high-end systems experienced 4.2% and 6.4% revenue growth to $9.1 billion and $4.1 billion respectively in 4Q12. At the same time, demand for midrange systems experienced a year-over-year revenue decline of 10.0% to $1.5 billion in 4Q12. The volume segment and high-end systems were both buoyed by a favorable technology refresh cycle with volume systems benefiting from continued demand for x86 servers deployed as part of consolidation and virtualisation initiatives while increased spending for high-end systems was helped by strong demand for IBM System s mainframes.
IBM held onto the number 1 spot in the worldwide server systems market with 36.5% market share in factory revenue for 4Q12, as revenue increased 3.1% year over year. IBM experienced significant improvements in demand for its System s mainframes aided by a strong product refresh cycle. The fourth quarter also delivered the highest quarterly revenue IBM has achieved in System s in more than a decade. HP held the number 2 spot with 24.8% share for the quarter as revenue decreased 3.2% compared to 4Q11. Although HP experienced solid demand for its x86-based ProLiant servers, it was offset by weak Itanium-based Integrity server demand in the quarter. Dell increased server revenue by 5.7% year over year and maintained third place with 15.1% factory revenue market share in 4Q12. Three companies shared the number 4 market position, with Oracle, Fujitsu and Cisco all locked in a statistical tie in 4Q12. Additionally, this was the first quarter that Cisco maintained a position in the top 5 server rankings.
Linux server demand was positively impacted by high performance computing (HPC) and cloud infrastructure deployments, as hardware revenue improved 12.7% year over year in 4Q12 to $3.0 billion. Linux servers now represent 20.4% of all server revenue, up 1.7 points when compared with the fourth quarter of 2011.
Microsoft Windows server demand continued to increase in 4Q12 as hardware revenue increased 3.2% year over year. Quarterly revenue of $6.7 billion for Windows servers represented 45.8% of overall quarterly factory revenue, the same share as in the prior year's quarter.
Unix servers experienced a revenue decline of 24.1% year over year to $2.6 billion representing 17.6% of quarterly server revenue. This was the sixth consecutive quarter of revenue decline in the Unix server market and all major Unix server vendors experienced a revenue decline when compared with the fourth quarter of 2011.
After five consecutive quarters of revenue declines, IBM's System s mainframe running s/OS increased revenue 55.6% year over year to $1.8 billion, representing 12.3% of all server revenue in 4Q12.
"The IBM System s mainframe platform had its highest quarterly revenue since 1997, generating nearly $2 billion and driving the overall server market to positive growth in the quarter," said Jean S Bosman, research vice president in IDC's Enterprise Platforms Group. "This dramatic growth was due to several factors: technology refresh, new products such as sEnterprise, new accounts in emerging economies, and consolidation of some enterprise Linux workloads onto IBM System s, using the Integrated Facility for Linux (IFL) specialty engines. Although revenue results for System s are traditionally heavier in the fourth quarter, this accelerated acquisition shows the breadth and depth of the IBM mainframe installed base."