Q2 Server Data: HP, IBM Take Big Hits As Dell Surges


The global market for servers continued to struggle in the second quarter of 2013 with revenue down across the board and market-share leaders Hewlett-Packard and IBM continuing to see double-digit hits to their balance sheets. Server market-share data, released separately Wednesday by research firms Gartner and IDC, both show IBM leading the revenue pack, followed by HP, Dell and Oracle.

Gartner reported that worldwide server revenue declined 3.8 percent in the second quarter of 2013 compared with the same period last year. According to IDC, worldwide revenue for the server market decreased 6.2 percent year over year.

Dell bucked market trends by making significant revenue gains, according to Gartner and IDC. Gartner reported Dell's piece of the global server revenue pie jumped 10.7 percent compared with last year's second quarter, and IDC estimated it to be up 10.3 percent.

HP took the biggest worldwide server revenue hit, dropping 17.5 percent year-to-year, according to Gartner and IDC. Gartner reported IBM's server revenue dropped 9.7 percent and IDC reported a drop of 10 percent.

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"It looks like doom and gloom, but there are some bright spots," said Jed Scaramella, research manager in the enterprise server group at IDC. "When the top five players make up 80 percent of the market, when one doesn't do well it drags everyone down."

Dell and Cisco Systems were the big winners for the second quarter, due to each of the companies finding isolated server market opportunities, Scaramella said.

Dell's global unit server shipments were up 10.7 percent across the board, according to Gartner, due in large part to shipments of density-optimized servers, which are favored by large service providers and Internet companies. Cisco's server shipment share shot up 58.5 percent year-to-year, according to Gartner, due to a booming market for hyperscale servers used in virtualization data centers.

IDC reported density-optimized servers now represent 6.2 percent of all server revenue and 10 percent of all server shipments. Dell maintained the No. 1 spot in the density-optimized segment in the second quarter with 60.5 percent revenue share, IDC reported.

"Density-optimized servers achieved the highest growth of any segment in the server market," Scaramella said.

Scaramella said that HP and IBM have been hurt in particular by sagging sales of Unix systems that are stuck in a "valley" of a four- to six-year upgrade cycle. IDC reported Unix servers experienced a 21 percent revenue decline in the second quarter vs. the year-ago quarter. Also impacting sales at IBM was the rapid growth in high-density servers.

"IBM is in the high-margin business and the hyperscale market is all about low margins and high-volume sales," Scaramella said.

HP continues to struggle to define its server game plan, Scaramella said. "Which markets does HP want to be in? It can't be low end and high end. HP has a lot of challenges," he said.

PUBLISHED AUG. 28, 2013