Q1 Server Vendor Winners And Losers

Seven Key Q1 Server Market Trends

The server market is under intense pressure, and vendors are battling more aggressively than ever for market share. Here are five key trends from the first-quarter preliminary unit market share data from market research giants Gartner and IDC. Both market research firms caution that the data is preliminary. Final first-quarter server market share data will be released by both market researchers at the end of May.

Dell Is Gaining Server Share

IDC and Gartner preliminary data shows Dell gaining unit share in the intensely competitive server market even as the company moves to complete a $24.4 billion leveraged buyout. On a worldwide basis, Dell's first-quarter server unit shipments grew 5.7 percent compared to the year ago quarter, according to IDC.

Gartner first-quarter preliminary worldwide data, meanwhile, shows Dell's unit server shipment share up 2.6 percent to 22.2 percent in the first calendar quarter compared to the year ago quarter.

Dell's unit share of the North American market, meanwhile, climbed to 35.7 percent in the first quarter, up from 31.7 percent during the same quarter a year ago, according to IDC preliminary data.

Dell CEO Michael Dell says the gains are signs of a company that is getting more aggressive and sharply focused on executing in the sales trenches. "We are playing offense here," he said. "The other guys are playing defense."

HP Is Losing Server Share

Hewlett-Packard worldwide server unit share was down 15.4 percent in the first quarter compared to one year ago, according to IDC preliminary data.

Gartner preliminary data for first quarter showed HP's worldwide first-quarter unit share down 15.2 percent to 25 percent, according to the Gartner preliminary data. HP still holds the No. 1 worldwide market share position, according to the preliminary Gartner data.

"One quarter does not make a trend," said HP in a statement supplied to CRN. "We've been the leader for 17 years and now 68 quarters (according to the IDC preliminary report). HP continues to be at the forefront of the data center evolution, accelerating the pace of innovation and industry-leading server technology for our customers (e.g. Moonshot, SDN, CloudSystem, 3Par)."

Cisco Is Gaining Server Share

Cisco, which unveiled its Unified Compute System four years ago, continues to make server share gains. Cisco's worldwide server unit share was up 39.5 percent in the first quarter to 2.4 percent share, according to the preliminary Gartner data.

In February, IDC dubbed Cisco the third largest vendor in the blade server market with a 15.3 percent share, coming in behind IBM with 21.7 percent and market leader HP with 44.7 percent.

"We went from nowhere in blades to No. 3 in blades in the matter of a few years," said John Growdon, senior director of Data Center Sales, Worldwide Channels at Cisco, told CRN in an interview earlier this year.

IBM Is Losing Server Share

IBM, which CRN has reported was in negotiations to sell its x86 server business to Lenovo, saw its worldwide unit server share drop 14.4 percent in the first quarter to 9.8 percent, according to preliminary Gartner data.

IBM has refused to comment on a potential sale of the x86 server business to Lenovo. But IBM CFO Mark Loughridge told financial analysts in April that IBM is planning to divest some poorly performing businesses in the current quarter.

"There are parts of our business that are in transition or have been underperforming, like elements of our Power, [System] x and storage product lines that showed disappointing performance in the first quarter," Loughridge said. "Here we're going to take substantial actions," he said, without offering details.

Lenovo Is Gaining Server Share

Lenovo, which has made growing its footprint in the server market a top priority, saw its worldwide server unit shipments increase 48.9 percent to 1.8 percent share in the first quarter, according to preliminary Gartner Data.

Chris Frey, vice president of North American commercial channels at Lenovo, recently told CRN that the company has seen its server channel sales grow 70 percent in the past 12 months. "I said last year at [Accelerate 2012] that we need to earn the right in the low-end server market before we can move up to the high end," Frey said. "And I think we earned that right in the last year, so we're looking to move upstream."

Lenovo solution providers have told CRN they are anxious to see the vendor step up its server presence.

Oracle Is Losing Share

Oracle continues to have trouble in the server hardware market three years after its $7.4 billion acquisition of workstation maker Sun Microsystems.

The database kingpin's worldwide server unit share declined by 26.1 percent to 1.1 percent in the first quarter, according to the preliminary Gartner data.

Oracle's hardware systems product sales for its third fiscal quarter ended Feb. 28 plunged 23 percent to $671 million compared with $869 million in the same quarter one year ago. Oracle CEO Larry Ellison, for his part, has predicted that 2014 will be a "big growth year" for the company's hardware business.

White Label/Other Vendors Are Gaining Share

With companies like Amazon, Facebook and other consumer big data giants building their own servers to power their growing data centers, the worldwide unit server share for the other category jumped 9.6 percent with a 29.7 percent market share, according to preliminary Gartner data.

Gartner preliminary data shows other unit server shipments at 691,129 in the first quarter, up from 630,323 in the year ago period.

By comparison, HP shipped 580,585 server units in the first quarter, according to the preliminary Gartner data, accounting for 25 percent of the worldwide market.