EMEA server markets see revenue return
Revenue for Q1 hits 42.9bn although shipments decline
The EMEA server market saw a 1.5% year-on-year rise in revenue in Q1 2014, according to IDC's EMEA Server Tracker.
The market saw sales up by $44m to $2.9bn for the quarter, although shipments were down 3.9% to 537,800, due to the trend towards integrated solutions and virtualised servers.
The quarter-on-quarter performance in the EMEA region between Q4 13 and 1Q14 highlighted an overall negative trend, with a 20.3% decrease in vendor revenue and a 10.8% decrease in units shipped. The strong disparity between the corresponding quarters and quarter-on-quarter figures can be attributed to the very seasonal nature of the server market in EMEA, where many deals take place at the end of the calendar year.
"Units shipped in EMEA over the past three years have continued along the same consistent contraction trend, with 3Q11 the last quarter to see clearly positive unit growth in the region," said Giorgio Nebuloni, research manager, Enterprise Server Group, IDC EMEA. "Despite a strong push for additional capacity in ‘mega' data centre customers and renewed focus on tower and rack volumes by the largest OEMs, the macro-trend in the x86 market continues to point to value as the only real growth opportunity. Vendors with a strong focus on attach rates and profitability are the best positioned to win in this market."
The increase in vendor revenue between 1Q13 and 1Q14 can be attributed to the positive growth in EMEA's two largest product types, with rack-optimised and blade servers seeing 2.8% and 5.0% growth in revenue respectively. These two products contributed 76.1% to overall EMEA vendor revenue and saw a combined 3.4% increase compared with 1Q13, though their unit shipments continued to decrease. This has resulted in an increase in ASPs for rack-optimised and blade servers - an increase of around $357, according to IDC's quarterly tracker.
"The EMEA blade market has seen strong growth in the higher-end market," said Eckhardt Fischer, research analyst, IDC EMEA Enterprise Server Group. "This targeting of higher-end blade systems is allowing vendors to offset the drop in units shipped with higher average selling prices. This has made it possible for vendors in the EMEA market to generate positive dollar revenue growth despite a decrease in units. Blade servers have also seen increased traction in integrated systems and data centres-in-a-box, a segment that over the past year has seen strong double-digit growth in the region. We expect this to remain a constant in 2014, as blades become part of broader integrated solutions."
x86 server market revenue for 1Q14 totalled $1.72 billion, and accounted for 81% of the total value (an increase of 6 points on the previous quarter and equal to that of 1Q13). x86 servers in EMEA grew 2.2% in dollar revenue terms, despite the continued decline in units shipped (down 3.7%).
Non-x86 vendor revenue accounted for $541 million and 3,810 units in the EMEA region, a decline of 1.3% and 27.2% respectively compared with 1Q13. Quarter-on-quarter non-x86 servers declined 39% in revenue and contracted by 2,368 units (down 38.3%). As the largest contributor to non-x86 servers in EMEA by total revenue ($256 million), RISC servers reported the only growth in revenue compared with 1Q13 (2.6%). When comparing growth figures for 1Q12-1Q13 with those for 1Q13-1Q14, non-x86 servers have shown positive growth in revenue, a hint of stabilization in a fairly small market segment.
For the Central and Eastern Europe, Middle East, and Africa region (CEMA) server revenue continued to decline, decreasing 2.8% year over year to $673.72 million in 1Q14. Sales of x86 servers recorded a marginal increase, driven by demand for blade and rack-optimized servers, while non-x86 servers continued in negative trend.
"The Central and Eastern Europe [CEE] sub-region was down 5.7% to $335.70 million," said Jiri Helebrand, research manager, IDC CEMA. "Investments in data centre expansion from Internet and cloud service providers drove demand for x86 rack servers, keeping overall x86 server revenue afloat. In contrast, non-x86 server revenue declined 29.7% year over year. The Middle East and Africa [MEA] sub-region was up 0.3% year over year, reaching revenue of $338.02 million, driven by infrastructure investments in Africa. The Middle East region declined 1.8% year over year, weighed down by continued weak performance in UAE and Saudi Arabia."
HP lead the EMEA market, with 37.6% market share by revenue, based on revenues of $1.09bn in the quarter. IBM was second, with 19.6% share from revenue of $569m, and Dell was third with 15.6% market share from $452m revenue. Fujitsu was in fourth place, with 7.1% market share from $207m revenue and Oracle was fifth with 5.5% share of the market and $160m in revenue.