Worldwide server shipments in the third quarter of 2010 grew 14.2 percent year over year, while revenue moved upward 15.3 percent year over year, according to Gartner, Inc.
"The third quarter produced some solid year-over-year growth globally in both shipments and vendor revenue," said Jeffrey Hewitt, research vice president at Gartner. "All regions showed growth in both shipments and vendor revenue save one. The Middle East and Africa fell 2.9 percent in vendor revenue in spite of shipment growth of 4.2 percent for the quarter.”
"As in the first half of this year, x86-based servers were the main driver of the market; they grew 14.9 percent in units and 29.5 percent in revenue in the third quarter of 2010. Also following earlier trends, the x86-based server market provided an increase in average selling prices from more robust server configurations to accommodate virtualization; these higher average selling prices pushed revenue higher than shipments, and this was the case in the third quarter for all regions. The 'Other' CPU category, which is primarily mainframes, also added to the revenue increase for the quarter with growth of 9.9 percent. RISC/Itanium Unix servers remained in a slump with drops of 10.1 percent in shipments and 9.5 percent in vendor revenue compared with the same quarter last year," Mr. Hewitt said.
From the regional standpoint, Latin America grew the most significantly in shipments with a 28.3 percent increase. Eastern Europe posted the highest vendor revenue growth at 33.3 percent for the period. The U.S. climbed 17 percent in shipments and 16.3 percent in vendor revenue with sales being driven by demand from large-scale data center purchases; Western Europe grew 8.8 percent in shipments and 5.7 percent in vendor revenue.
HP led the worldwide server market on the basis of revenue. The company posted over $3.9 billion in server vendor revenue for a total share of 32.1 percent worldwide for the third quarter of 2010. This revenue share was up 1.9 percent year over year. All of the top five global vendors except Oracle had year-on-year revenue increases for the third quarter of 2010.
In server shipments, HP remained the worldwide leader in the third quarter of 2010 with a year-over-year shipment increase of 16.2 percent for the quarter. This growth was driven by increases produced from HP's ProLiant brand. HP's worldwide server shipment share was 32.6 percent, representing a 0.6 percent increase in share from the same quarter in 2009.
Of the top five vendors in server shipments worldwide, Dell, Fujitsu, HP, and IBM posted increases in units for the third quarter.
As noted above, the primary driver of the market growth for the quarter remained the x86-based server hardware platform as it has been for the first half of 2010. One difference for this quarter was the increase in revenue for the "Other" CPU category. RISC/Itanium Unix continued to produce worldwide declines in both shipments and revenue for the period despite growth of that platform in areas such as Asia/Pacific, Japan and Latin America.
Another difference in the third quarter compared with the first two quarters was in form factor growth. While blade servers continued to grow, they were outpaced by rack-optimized servers (with significant contributions from "skinless" server versions) this quarter. Blade servers grew 7 percent in shipments and 26 percent in vendor revenue; rack-optimized servers increased 23.7 percent in shipments and 31.2 percent in revenue for the quarter.
In Europe, the Middle East and Africa (EMEA), server shipments surpassed 581,000 units in the third quarter of 2010, an increase of 10.4 percent from the same period last year. Server revenue totaled $3.3 billion in the third quarter of 2010, a growth of 7.4 percent from the same quarter last year.
“The EMEA server market’s recovery continues but growth rate levels remain lower than in 2008,” said Adrian O’Connell, research director at Gartner. “While the recovery is encouraging, ongoing economic uncertainty in many European countries continues to inhibit higher levels of demand and spending.”
In the third quarter of 2010, Dell grew its shipments 22.6 percent and was the only top five vendors to exhibit growth above the average market growth. Dell benefited in part from a weak performance last year and an increased focus on its enterprise business which is starting to pay dividends. HP maintained the No. 1 position but saw its market share drop slightly this quarter. Oracle was the only vendor of the top five ranking to show a decline year over year.
“Following the acquisition of Sun’s hardware business, the company now faces the challenge of preventing further declines in the hardware segment,” Mr. O’Connell said.
In the x86 market, total volume in EMEA grew 11.0 percent in the third quarter of 2010. “The x86 market continues to grow in importance for the overall server market performance. In the third quarter of 2010, it accounted for 70 percent of total market revenue, up 10 percent from the same period in 2009,” said Mr. O’Connell. “The x86 segment also highlights the relative performance of vendors as x86 revenue increased 25.9 per cent year over year and is the one key segment to have surpassed the shipment levels achieved in the third quarter of 2008. Vendors in the other segments continued to suffer from ongoing weakness in demand.”
Overall, RISC and Itanium Unix revenues declined 21.7 percent in the third quarter of 2010. HP moved to the No. 1 position in the third quarter of 2010, and despite a decline of 18.5 percent, it increased its share to 36.9 percent. IBM moved to the No. 2 position and recorded the sharpest decline of 28.3 percent. This poor performance was exacerbated by its transition to the new POWER7 based systems. Oracle slipped to third position with a decline of 18 percent. Bull and Fujitsu maintained their respective fourth and fifth places.
“This year has been very challenging for RISC Itanium Unix vendors,” said Mr. O’Connell. “The outlook for 2011 poses continued challenges for server vendors as revenue is expected to grow by only 0.8 percent. A weak economic environment will inhibit overall levels of server spending which will place a premium on vendors who are able to successfully execute on competitive attack programs.”