(WEB HOST INDUSTRY REVIEW) — As server market demand continued to improve around the world, worldwide server market factory revenue increased 4.6 percent year over year to $10.4 billion in the first quarter of 2010, marking the first quarter of YOY revenue growth in seven quarters, according to the International Data Corporation (www.idc.com) Worldwide Quarterly Server Tracker.
According to the data released Wednesday, server unit shipments increased 23.2 percent YOY in 1Q10, picking up from the modest 1.4 percent increase in shipments in 4Q09 and representing the fastest YOY quarterly server shipment growth in more than five years.
The sharpest improvement was in the volume system sector with revenue growing 31.9 percent YOY, the second consecutive quarter of positive growth for the segment. Mid-range enterprise demand, however, weakened, declining 19.0 percent YOY and the slowdown extended to the high-end enterprise segment as revenue declined 28.9 percent when compared to the same quarter last year, and marks the sixth consecutive quarter in which both the mid-range and high-end server segments of the server market have experienced a YOY revenue decline.
“This is the third consecutive quarter that IDC reported improving market conditions for servers worldwide,” IDC enterprise platforms vice president Matt Eastwood said in a statement. “The market recovery has been led by sharply higher demand for x86 servers around the world as SMB and enterprise customers aggressively refresh their infrastructures. IDC expects the recovery to extend to Unix and mainframe platforms in the second half of 2010 as the technology refresh extends from volume- to value-oriented systems with somewhat longer planning horizons. It’s also important to note that we are in the middle of one of the sharpest periods of market inflection in a decade and we expect significant shifts in technology usage and market shares to occur as the recovery continues.”
1Q10 was also significant because HP (www.hp.com) wrestled the number-one spot in terms of worldwide server revenue from IBM (www.ibm.com). With revenue growing 16.3 percent YOY, HP factory revenue accounted for 32.5 percent of the market, 3.3 points of share higher than a year ago largely due to strong demand for its x86 ProLiant servers during the quarter.
With 27.5 percent share, IBM’s factory revenue declined 1.4 percent compared to 1Q09 due to weak sales of its POWER Systems and System z servers as customers waited for the completion of a product refresh cycle. Demand for its x86-based System x servers, however, remained strong during the quarter.
The blade market accelerated and continued its sharp growth in the quarter with factory revenue increasing 37.1 percent YOY, with shipment growth increasing by 20.8 percent compared to 1Q09. Overall, bladed servers, including x86, EPIC, and RISC blades, accounted for $1.4 billion in revenues, making up 13.6 percent of quarterly server market revenue.
“Driven by the pent-up demand in customers’ refresh cycles, the x86 rack server segment experienced its largest growth in years,” IDC enterprise servers senior analyst Jed Scaramella stated. “The rack segment exceeded the overall market due in part to a relatively easier year-over-year compare as the economic downturn severely impacted the segment in the first quarter of 2009. In the first quarter of 2009, we observed a lot of business in the mid-market as well as refresh activity of a more transactional nature; these factors have driven x86 rack-based revenue to just below 1Q08 value. Blade servers, which are more strategic in customer deployments, continue to accelerate in annual growth rates. The blade segment fared relatively well during the 2009 downturn and have increased revenue value by 13 percent from the first quarter of 2008.”
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