2013 Worldwide Server Market Grew 2.1 Percent in Shipments, While Revenue Decreased 4.5 Percent

In the fourth quarter of 2013, worldwide server shipments grew 3.2 percent year over year, while revenue declined 6.6 percent from the fourth quarter of 2012, according to Gartner, Inc. In all of 2013, worldwide server shipments grew 2.1 percent, and server revenue declined 4.5 percent.

"2013 presented some pronounced differences in various server market segments," said Jeffrey Hewitt, research vice president at Gartner. "We've seen ongoing growth in Web-scale IT deployments, while the enterprise remained relatively constrained."

"In terms of hardware platform types, mainframe and RISC/Itanium Unix platform market performance kept overall revenue growth in check," Mr. Hewitt said.

In the fourth quarter of 2013, the regions with the highest growth rates in terms of unit shipments were Asia/Pacific (16.3 percent), Japan (7.5 percent) and North America (relatively flat at 0.01 percent). All regions declined in vendor revenue except Asia/Pacific, which grew by 0.6 percent year over year.

HP led the worldwide server market in revenue terms in the fourth quarter of 2013 (see Table 1). The company ended the year with $3.8 billion in revenue for the fourth quarter, for a total share of 28.1 percent worldwide. This was up 6.0 percent compared with the same quarter in 2012.

Of the top five global vendors, only HP and Cisco showed growth for the quarter. IBM had the largest decline with a decrease of 28.9 percent.

Table 1
Worldwide: Server Vendor Revenue Estimates, 4Q13 (U.S. Dollars)

Company	4Q13 Revenue	4Q13 Market Share (%)	4Q12 Revenue	4Q12 Market Share (%)	4Q13-4Q12 Growth (%)
HP	3,839,527,072	28.1	3,620,601,066	24.8	6.0
IBM	3,623,543,805	26.5	5,097,759,610	34.9	-28.9
Dell	2,074,167,350	15.2	2,084,634,094	14.3	-0.5
Cisco	646,100,000	4.7	480,221,149	3.3	34.5
Oracle	574,712,435	4.2	603,030,654	4.1	-4.7
Other Vendors	2,904,637,567	21.3	2,734,378,193	18.7	6.2
Total	13,662,688,230	100.0	14,620,624,767	100.0	-6.6

Source: Gartner (February 2014)

In server shipments, HP remained the worldwide leader for the fourth quarter of 2013 (see Table 2) with a year-over-year shipment increase of 8.7 percent.

Of the top five vendors in server shipments worldwide, all but Dell and IBM had shipment increases for the period. Huawei exhibited the strongest year-over-year increase with growth of 187.9 percent.

The results for the quarter were centered around x86 server demand, which increased in shipments by 3.8 percent and revenue by 4.3 percent for the fourth quarter of 2013.

Table 2
Worldwide: Server Vendor Shipments Estimates, 4Q13 (Units)

Company	4Q13 Shipments	4Q13 Market Share (%)	4Q12 Shipments	4Q12 Market Share (%)	4Q13-4Q12 Growth (%)
HP	721,032	27.9	663,598	26.5	8.7
Dell	504,322	19.5	532,890	21.3	-5.4
IBM	231,321	9.0	291,328	11.6	-20.6
Huawei	91,433	3.5	31,762	1.3	187.9
Fujitsu	72,263	2.8	69,853	2.8	3.5
Other Vendors	961,353	37.2	911,291	36.4	5.5
Total	2,581,723	100.0	2,500,722	100.0	3.2

Source: Gartner (February 2014)

Full-Year 2013 Server Market Results

The year of 2013 demonstrated growth in shipments with an increase of 2.1 percent, but revenue declined 4.5 percent with varying geographic results. x86 servers continued to produce some growth as the predominant platform used for large-scale data center build-outs, particularly in North America. Emerging regions like Asia/Pacific and Latin America also added to the growth for the year.

x86 blade servers posted a revenue increase of 0.8 percent and a shipment decrease of 2.6 percent for the year. HP was the 2013 leader in x86 blade server shipments with 40.3 percent market share; Cisco was in second place with 15.9 percent of the market.

The outlook for 2014 suggests that modest growth will continue. These increases will continue to be buffered in the enterprise by the use of x86 server virtualization to consolidate physical machines as they are replaced.

EMEA 4Q13 Results

In Europe, the Middle East and Africa (EMEA), both server shipments and revenue declined in the fourth quarter of 2013. Server revenue totaled $3.6 billion in the quarter, a decline of 6.4 percent from the fourth quarter of 2012 (see Table 3). Server shipments totaled 613,000 units in the final quarter of 2013, a decrease of 2.5 percent from the same period of the previous year (see Table 4). Server shipments in 2013 declined 5.6 percent to total 2.3 million units, and server revenue dropped 6.3 percent to total $12.4 billion in 2013.

"The EMEA server market continued to suffer as it recorded its 10th consecutive quarterly revenue decline," said Adrian O'Connell, research director at Gartner. "Economic weakness continued to have a profound effect on the EMEA server market. Total revenue in 2013 was only around two-thirds of that seen in 2007, before the downturn set in."

All regions in EMEA showed year-over-year server revenue declines; the greatest weakness was in Eastern Europe, with a 14.1 percent year-over-year decrease. Western Europe declined 4.9 percent, while the Middle East and Africa saw a 6.8 percent drop in revenue.

In the fourth quarter of 2013, x86 server revenue increased 1.4 percent, while RISC/Itanium Unix revenue declined 20.1 percent. Revenue in the Other CPU segment decreased 35.7 percent. Platform migrations continued to impact non-x86-based systems. "Although the Other CPU segment saw a period of growth, the cyclical driver has now ended, compounding the general weakness," said Mr. O'Connell.

In the fourth quarter of 2013, both HP and IBM showed revenue declines. HP's decline was lower than the market average as it improved its execution and gained market share year over year. IBM had a weak quarter due to its product life cycles, and the revenue decline of 26.4 percent in the quarter made it lose 7 percentage points of share compared with the same quarter in 2012. Dell continued to focus on achieving server growth and — along with Oracle — had the strongest year-over-year revenue increase.

"The EMEA server market ended the year on a particularly low point," said Mr. O'Connell. "The good news for vendors is that demand appears to be stabilizing, but polarization remains between high-end and low-end platforms. Vendors that sell low-end servers should see a more positive 2014, but those exposed to the high-end segments will continue to face tough challenges."

Table 3
EMEA: Server Vendor Revenue Estimates, 4Q13 (U.S. Dollars)

Company	4Q13 Revenue	4Q13 Market Share (%)	4Q12 Revenue	4Q12 Market Share (%)	4Q13-4Q12 Growth (%)
HP	1,227,689,485	34.5	1,257,104,552	32.9	-1.9
IBM	915,632,505	25.7	1,244,617,164	32.7	-26.4
Dell	488,845,100	13.7	467,717,300	12.3	4.5
Fujitsu	252,090,555	7.1	246,676,881	6.5	2.2
Oracle	170,936,564	4.8	162,818,277	4.3	5.0
Others	503,197,846	14.1	429,986,643	11.3	17.0
Total	3,558,392,054	100.0	3,802,920,816	100.0	-6.4

Source: Gartner (February 2014)

Table 4

EMEA: Server Vendor Shipments Estimates, 4Q13 (Units)

Company	4Q13 Shipments	4Q13 Market Share (%)	4Q12 Shipments	4Q12 Market Share (%)	4Q13-4Q12 Growth (%)
HP	241,385	39.4	247,613	39.4	-2.5
Dell	120,376	19.6	125,762	20.0	-4.3
IBM	69,311	11.3	82,803	13.2	-16.3
Fujitsu	33,362	5.4	37,611	6.0	-11.3
Cisco	14,054	2.3	13,816	2.2	1.7
Others	134,787	22.0	121,447	19.3	11.0
Total	613,274	100.0	629,052	100.0	-2.5

Source: Gartner (February 2014)

Additional information is available to clients who have access to Gartner's Servers Quarterly Statistics. This database provides worldwide market size and share data by vendor revenue and unit shipments. Segments include: region, vendor, vendor brand, subbrand, CPU type, CPU group, max CPU, platform, price band, operating system and distribution channels.