Server 2012 Highlights
- The market dropped by 3% in 2012 to $58.8 billion
- In Q4 the market grew by 7.5%, driven by a huge growth in IBM System z revenues
- HP led the market in 2012 with a 23.0% share
- IBM is closing fast
- Dell grew its market share significantly
- x86 servers now account for 73.6% of overall revenues
- We forecast a decline of 1% in 2013 followed by 4 years of growth
- Servers form the heart of integrated systems
- We expect a rise in ARM-based microservers for hyperscale workloads
- Specific workloads and software platforms such as SAP HANA, Hadoop, VDI and server virtualisation will become more important in 2013
For an offering which takes up such a small proportion of ITC spending (1% of the total, 4.5% of hardware in 2012), the server market is inornadately important. Servers sit in the heart of the data centre and the growing market for integrated systems, where they are joined with the hitherto disaggregated components of storage, networking, as well as infrastructure and systems management software.
In the last few years the server market has not done particularly well – it grew by 5% in 2011 to $60.4 billion, only to slip by 3% in 2012 to $58.8 billion: in 2012 unit shipments however grew (14.8 to 15.0 million), as did the overall installed base – from 44.0 to 47.3 million.
In the fourth quarter there was a significant 7.5% growth (see Figure 1), the reasons for which we analyse here. You’ll be interested to read about the success of Intel x86 and IBM System z, as well as the future for ARM-based microservers.
HP Heads The Server Market With IBM Closing Fast
HP led the server market in 2012 – its $13.5 billion revenues gave it a 23.0% share – just ahead of IBM, whose $11.5 billion accounted for 19.7% of revenues. Despite its difficult transition into an Enterprise vendor with its own IP Dell has been doing very well in the server market – its $11.6 billion accounting for 14.2% in 2012, up from 12.4% in 2011. Oracle with its Sun heritage (4.0%) and Fujitsu (2.5%) took up 4th and 4th positions respectively. Despite its success with UCS, vBlock and FlexPod Cisco’s market share in servers stood at just 1.9%, putting it in 6th position.
Full market shares for the year are shown in Table 1.You’ll note that we’ve included Cray for the first time, including it with Appro which it bought at the end of the year. We include Teradata because its OLAP appliances are essentially servers at hear. We note that Lenovo is now competing in the server market, branching out from its PC supplier status enhanced by the purchasing of IBM’s PC division in 2006. Apple creeps into the table at the top because there are still 1.4 million servers in its installed base, despite leaving the market a few years ago.
Table 1 – Server Market Shares Revenues ($b), Shipments and Base (m) – 2012
| Vendor | Value ($m) | Share | Unit (m) | Share | Base (m) | Share |
| HP |
$13.5 |
23.0% |
3.6 |
24.3% |
48.4 |
26.2% |
| IBM |
$11.6 |
19.7% |
1.0 |
6.6% |
11.3 |
6.1% |
| Dell |
$8.3 |
14.2% |
3.3 |
22.3% |
39.5 |
21.4% |
| Oracle |
$2.4 |
4.0% |
0.2 |
1.3% |
3.6 |
1.9% |
| Fujitsu |
$1.5 |
2.5% |
0.2 |
1.6% |
3.1 |
1.7% |
| Cisco |
$1.1 |
1.9% |
0.1 |
0.7% |
1.1 |
0.6% |
| Bull |
$1.1 |
1.9% |
0.2 |
1.3% |
1.5 |
0.8% |
| Hitachi |
$1.0 |
1.7% |
0.2 |
1.3% |
2.6 |
1.4% |
| Teradata |
$0.9 |
1.5% |
0.0 |
0.1% |
0.2 |
0.1% |
| Acer |
$0.8 |
1.4% |
0.4 |
3.0% |
7.1 |
3.8% |
| Supermicro |
$0.6 |
1.0% |
0.3 |
2.1% |
3.1 |
1.7% |
| Unisys |
$0.5 |
0.9% |
0.0 |
0.1% |
0.1 |
0.1% |
| Asus |
$0.5 |
0.8% |
0.3 |
1.7% |
2.5 |
1.3% |
| SGI |
$0.4 |
0.8% |
0.0 |
0.2% |
0.3 |
0.2% |
| Cray/Appro |
$0.4 |
0.7% |
0.0 |
0.3% |
0.7 |
0.4% |
| NEC |
$0.4 |
0.7% |
0.1 |
0.8% |
4.0 |
2.1% |
| Lenovo |
$0.4 |
0.7% |
0.2 |
1.1% |
1.0 |
0.6% |
| NCR |
$0.4 |
0.6% |
0.0 |
0.1% |
0.2 |
0.1% |
| Huawei |
$0.3 |
0.5% |
0.1 |
0.6% |
0.7 |
0.4% |
| Apple |
$0.0 |
0.0% |
0.0 |
0.0% |
1.4 |
0.7% |
| Other |
$12.8 |
21.7% |
4.6 |
30.6% |
52.1 |
28.2% |
| Total |
$58.8 |
100.0% |
15.0 |
100.0% |
184.4 |
100.0% |
Source: ITCandor, 2013
A Great Fourth Quarter For IBM System z
The server market is now dominated by x86 processing from Intel and AMD – accounting for 73.6% of revenue and 98.2% of unit shipments in 2012 (see Table 2 and Figure 1). RISC/Other processors were found in just 17.8% of revenues, a significant drop on the 33.0% share they had back in 2003. A single vendor and platform – IBM System z – is also vitally important in the server market – its $5 billion revenues accounted for 8.6% of the market, although we count only 3k sales of systems in the year. See our detailed analysis here. We’ll write more about System z in an upcoming post: however it’s important to note that its success is highly seasonal, with peaks in the 4th quarter of every year and very dependent on product life cycles – expectation of new offerings suppress sales as much as introductions accelerate them. Revenues for System z grew by 48.7% in Q4, although the declines in previous quarters meant that it grew just 2.3% for the full year. x86 server revenues grew by 8.2% in the quarter to $11.6 billion, while RISC/Other servers declined by 14.5% to $2.7 billion.
Overall Q4 2012 was a brilliant quarter for the server market – a 7.5% growth to $16.4 billion.
Table 2 – Server Market Revenues ($b), Shipments and Base (m) By Type – 2012
| Chip | Value ($m) | Share | Unit (m) | Share | Base (m) | Share |
| x86 |
$43 |
73.6% |
14.685 |
98.2% |
179.757 |
97.5% |
| RISC/Other |
$10 |
17.8% |
0.266 |
1.8% |
4.636 |
2.5% |
| System z |
$5 |
8.6% |
0.003 |
0.0% |
0.040 |
0.0% |
| Total |
$59 |
100.0% |
14.954 |
100.0% |
184.434 |
100.0% |
Source: ITCandor, 2013
Some Conclusions – A Workload Driven Market Coming
We shouldn’t get carried away by the success of the server market in Q4 – it was heavily influenced by System z life cycles: however the rise in x86 sales is very positive. We’ve put the latest results into our mixing bowl and modified our server forecast (Figure 3).
We still think there will be a 1% decline in 2013, but from there we’ll see growth. Our rationale is the importance servers play in centralisation and integrated systems developments. We also expect to see a rise in the shipments and revenues from microservers with AMD processors – not massive at first, but significant in offering lower power consumption and hyperscale fabric capabilities for those workloads which don’t necessitate x86 chips. For HP, IBM, Dell and others it will be a year in which workloads take centre stage from Hadoop to SAP HANA and other types of Analytics, server and client device virtualisation.
As always we aim to keep up with developments and report our findings to you as we go forward. The market statistics in this paper are a small component of our server traker, which also includes data for virtualisation, individual country and regional markets, operating systems and the like. Click here to read our flyer. To find out how we define servers click here.
I am impressed on your research. However, IDC’s Worldwide Quarterly Server Tracker, February 2013 showed that the total 2012 server revenue is 51.28 billion which is different from your 58.8 billion.Could you please explain your source data that came out the 58.8 billion? Thank you for your help. Jason
Jason – thank you for your comment. I produced every server forecast in Western Europe for that company for 22 years, so I know both methodologies well. For revenue we both study the financial statements of each supplier (which give server values) and then add some for unknown vendors – so I’ve possibly assumed more of that.
I don’t cross check with other research suppliers when producing my stats, preferring not to be influenced by them.
Best Wishes – Martin
Hi! do your figures include servers bought by Google, Facebook or eastern businesses in China or S. Korea like Korea Telecom? I notice that Taiwanese manufacturers selling cloud servers to these companies did very well.
http://www.pcworld.com/article/2069280/hp-regains-server-lead-but-taiwan-vendors-see-big-growth.html
Clearly they are buying in bulk and get huge discounts. I suspect Google is hiding the details, for example.
The design of these cloud servers is radically different from the “olde worlde” manufacturers.
This is in line with my predictions on Cloud.
The partial success of z servers is kind of expected as they can build and run virtual servers in memory faster than any one else giving a top quality service at a considerable price. Also IBM say it is useful for fast back-end processing as online services get more complex and resource-hungry.
As far as I am aware the Solaris O/S is ready for z servers too.
The general lack of interest in Unix is partly due to Oracle mis-management which turned thousands of Unix admins into Linux admins. The licence changes of versions after Solaris 10 are part of this.
As for Linux Ubuntu will likely fall out of favour too as the long term support of Operating Systems is terminated. Pity, Ubuntu Precise Pangolin showed a lot of promise. I am looking around for a suitable replacement for Ubuntu.
We OpenSource Linux/Unix people just don’t like greedy billionaires and agressive marketing guys.
After all computing was developed by research scientists for mankind and NOT for people who have an insane psychological desire to acquire vast wealth (that they can never spend) at the cost of other men’s well-being.
Just like to note that I fully back the comments of Berners Lee on an Internet Magna Carta, however in English Law the Magna Carta is automatically included.
I fully expect Merkle-Net and other European government-recommended Cloud Services (like email and IM etc.) to be provided over the next few years in order to stop NSA spying with open UK complicity. Companies like Google and Facebook have been begging Obama to reign in the NSA and backdoors as it will undermine and possibly destroy their businesses in the near future.
Seems the Solaris on System z project is either dead, top secret or unofficial.