Server sales have turned a corner, IDC says

Server sales have picked up after a longslow spell and are likely to stay buoyant well into 2015 and beyond, IDC saidTuesday.

The growth last quarter wasmodest—worldwide server revenue climbed just 2.5 percent from a yearearlier—but server makers will welcome the news after five consecutive quartersof declines.

Server makers are benefitting from thestart of a cyclical refresh cycle, as customers replace systems they deployedsoon after the financial crisis, IDC said.

But there are other factors at work too,said IDC analyst Kuba Stolarski. Sales of x86 servers have been strong for sometime, lifted by companies like Google and Facebook building out their massiveinfrastructures.

But at the higher end of the market, salesof pricey Unix and mainframe systems have been in decline for years, draggingdown the server market as a whole. Now, those systems comprise a small enoughshare of the market that the x86 gains can shine though, Stolarski said.

What’s more, sales of a new type ofmidrange system—the converged infrastructure products sold by companies likeCisco Systems and VCE—have been increasing, also contributing to overall growth.

The upshot of those trends is that theserver market eked out some growth in the April-June quarter. Worldwide factoryrevenue reached $12.6 billion, up from $12.3 billion last quarter.

Two upcoming developments mean the growthshould continue and then accelerate next year, IDC said.

One is the release of servers basedon Intel’sGrantley Xeon server platform, expected at its developer conferencein San Francisco next month. A new Intel chip usually prompts a wave of serverpurchases.

Further out, Microsoft will end supportnext year for its widely used Windows Server 2003 OS, which will prompt moreupgrades.

Anyone expecting a “Windows XP” moment forservers should beware, though. The transition will likely be slower, Stolarskisaid, and some customers will keep their existing hardware and upgrade the OS.

Hewlett-Packard kept its top position inthe server market last quarter with 25.4 percent of revenue, up slightly fromthe year before.

Cisco was the biggest winner, expanding itsrevenue 35.4 percent. It still has a small share overall, at 4.4 percent, butIDC said it took joint fourth place with Oracle, whose sales increasedslightly.

Among the losers last quarter were IBM,which is in the process of selling its x86 server business to Lenovo, and sawits sales drop 10 percent, and Dell, which is now a private company and sawsales decline 6.5 percent, according to IDC.

(IDC is owned by International Data Group,the parent company of IDG News Service.)


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