The server market is showing signs of cooling off, as worldwide unit shipments in the first quarter of 2019 declined moderately. However, increases in average sale prices offset the decline in shipments, causing revenue to increase for the sixth consecutive quarter.
The Lowdown: Overall, quarterly server revenue increased 4.4% as vendors ticked up the average sale prices of products ranging from entry-level x86 servers to hyperscale systems. While revenue increased, the rate of increase slowed. In the previous five quarters, server revenue was growing at double-digit rates, according to IDC.
In the entry-level segment — or what IDC calls the “volume server,” segment — revenue increased 4.2%. Midrange server revenue increased 30.2%, but high-end systems revenue contracted for the second consecutive quarter, declining 24.7%. Overall server revenue was bolstered by increased prices, not unit shipments.
The Details: Nearly all server vendors saw server revenue increase in the first quarter. Year-over-year revenue growth at Dell is up 8.9%; at HPE, .2%; at Inspur, 36.4%; at Lenovo, 3.9%; and at Cisco, 6.9%.
The market share by revenue numbers are a mixed bag for server vendors. Dell, which holds the most market share, saw a marginal increase, up from 19.3% in the first quarter of 2018 to 20.2% in the first quarter of 2019. HPE saw its market share slip from 18.5% to 17.8%. Inspur’s market share shifted from 4.7% to 6.2%. Lenovo’s share held steady at 5.7%. And Cisco’s share was virtually unchanged at 5.3%.
In terms of market share by unit shipments, the story is somewhat different. By this measure, Dell is still the top server vendor, with 20% market share, which is down by .4% from the previous period. HPE saw its unit shipment share slip from 16.7% to 15.7%. Inspur’s grew from 6.4% to 7.9%. Super Micro declined from 5.7% to 5.3%. Lenovo dropped from 5.9% to 5.3%. And Huawei increased from 4.7% to 4.9%.
The Buzz: “Demand from both enterprise buyers and hyperscale companies purchasing through ODMs was less voracious than in previous quarters; coupled with a difficult compare period from a year ago, this impacted the pace of market growth during the first quarter,” said Sebastian Lagana, research manager, Infrastructure Platforms and Technologies, at IDC. “This was most evident in declining unit shipments during the quarter, although year-to-year average selling price (ASP) increases supported revenue growth for many vendors. As long as demand for richly configured servers supports further ASP growth, the market will offset slight declines in unit volume.”
