The global server market is continuing to expand, driven by a broad range of factors including demand from large cloud service providers to the rise of modern workloads such as artificial intelligence and analytics.
Established server original equipment manufacturers (OEMs) such as Dell and Hewett Packard Enterprise as well are original design manufacturers (ODMs) are handling much of the demand from the largest hyperscale cloud services.
The results of the rapid changes in the data center are that server revenues, shipments and average selling prices (ASPs) all grew in the first quarter of 2018, according to IDC’s analysts. It was the third consecutive quarter of double-digit revenue growth for the industry, and most revenue generated by the server market in history. According to Sanjay Medvitz, senior research analyst for servers and storage at IDC, everyone is benefiting.
"Hyperscale growth continued to drive server volume demand in the first quarter," Medvitz said in a statement. "While various OEMs are finding success in this space, ODMs remain the primary beneficiary from the quickly growing hyperscale server demand, now accounting for roughly a quarter of overall server market revenue and shipments."
Hyperscale data center operators such as Google, Amazon Web Services, Microsoft, Facebook and Alibaba are running massive data centers where the cost, density and power efficiency of their servers are as important as performance and where much of the technology is developed in-house. They also have the money and talent to support and service their systems, all of which makes ODMs an appealing alternative to more expensive and proprietary OEM systems.
The continued rise of ODMs can be seen in the first quarter IDC numbers. ODMs collectively own 24.4 percent of the market based on revenue, which grew 57.1 percent over the same period last year.
Furthermore, smaller server suppliers Inspur and Supermicro, both of which sell into hyperscale and cloud environments, have moved up into a statistical tie with Lenovo as the third largest vendors based on shipments, with Inspur showing a 77.5 percent increase in shipments and Supermicro a 32.9 percent jump.
But in fact revenue grew strongly in the first quarter for all of the top server makers. Dell and HPE were at a statistical tie at the top of the list, with 19.1 percent and 18.6 percent of the market, respectively. Lenovo, IBM and Cisco Systems rounded out the top five in a statistical tie, with between 5.2 percent and 5.8 percent. Dell saw revenue increase 50.6 percent, with HPE’s revenue jumping 22.6 percent. Lenovo’s revenue increased 50 percent, IBM’s 32.9 percent and Cisco’s 18.8 percent.
Dell also had the top spot in server shipments with a 20.6 percent market share, followed by HPE, Inspur, Lenovo and Supermicro.
Overall, shipments for ODMs climbed 55.8 percent in the quarter, giving them 25.6 percent of the market based on shipments.
Worldwide server market revenue increased 38.6 percent in the first quarter, to $18.8 billion, while shipments jumped 20.7 percent, to 2.7 million units. Although demand from cloud providers and hyperscalers and the emerging compute-intensive modern workloads played significant roles in the market’s growth, there also were other factors.
Organizations are increasingly turning toward software-defined infrastructures, where more of the workloads—such as data storage—is being shifted to servers. There is growing demand for newer processors, according to IDC analysts.
They pointed to Intel’s Purley platform, which features the chip maker’s “Skylake” Xeon Scalable Processors that were launched last year, but there also are a growing number of server chip options. Those include Advanced Micro Devices’ x86-based Epyc processors and Cavium’s new ThunderX2 Arm-based chips, which were released earlier this month.
IBM also is expanding the reach of its Power architecture through the OpenPower Foundation, although Qualcomm, which last year rolled out its Arm-based Centriq 2400 processor, reportedly is now looking to exit the server processor business.
IDC analysts also noted a broad server refresh cycle among enterprises and an increase in server ASPs, both of which also played a role in the server market boom.