Brand massacre in the server market

In the second quarter of 2017, according to IDC, the server market grew over 6 percent compared to the second quarter of last year. But most large, established vendors do not benefit from this: HPE, IBM and Lenovo have suffered heavy drops in sales. Only Dell is growing faster than the market.

IDC has the latest figures for worldwide sales of servers in the second quarter of 2017 presented . According to this, the manufacturers were able to achieve a total of 6.3 percent more sales with servers than in the same quarter of the previous year. According to market researchers, it now amounts to more than $ 15.7 billion. IDC's recovery is largely due to the availability of new server generations with Intel's Skylake CPUs, which many customers had been waiting for in the previous quarter.

However, the established manufacturers hardly benefit from the increase. HPE, which combines IDC with its China joint venture New H3C Group, can still keep the top spot in terms of sales. However, due to a decline in sales of 8.4 percent, the company loses over three percentage points of market share and now dominates the segment with 21.3 percent of its sales no longer as it did in previous years.

For Lenovo, the IDC analysts report a decline in sales of 13.9 percent. Thus, the Chinese manufacturer with a shrunken by 1.3 percentage points market share currently at 5.3 percent on rank 5 ahead of him with just under respectively over 6 percent market share Cisco and IBM.

While Cisco with at least 2 percent sales growth at least not lose, but still profits from market growth below average, IBM has suffered a sharp decline in sales of over 20 percent. Much of this is likely to be due to customers turning away from high-end systems and greater interest in mid-range servers. The first fell 18.9 percent year-over-year, the latter rising 19.6 percent over the same period. With a sales volume of 1.5 billion, it has now surpassed the high-end segment, which comes to 1.3 billion.

However, standard or so-called volume servers, with $ 12.9 billion in revenue, still account for the vast majority of the market segment. They increased by 8.3 percent. IDC expects this development to continue in the future.

Dell is the only well-known and well-established brand in the top 5 to outpace the market. The company achieved a market share of 17.7 percent in the first year after its merger with EMC, with a 7 percent increase in revenue. According to IDC, HPE is now in line with the number of units delivered: according to this calculation, HPE has a market share of 20.7 percent and Dell 20.1 percent. However, IDC does not consider differences of less than one percent meaningful.

With such subtleties, others do not need to plague. Big winners of the changes in the market are the so-called Original Design Manufacturers (ODM) in addition to the "others", who were able to increase their overall sales by 10.2 percent. These include companies such as Quanta, Wistron or Inventec, which used to be known as contract manufacturers. Strictly speaking, they are still today, but they no longer manufacture on behalf of a server brand, but directly on behalf of large user companies.

The trend has been apparent for some time . Nevertheless, the past quarter is an important turning point in the development. According to IDC, this market segment grew by more than 48 percent between the second quarter of 2016 and the second quarter of 2017. At 22.6 percent, the largest share of the companies in this group is now shared. Of the developments that favor their business, it seems that indirectly the providers grouped under "Other" benefit as well.

After a long decline in their shares in the past, they were now able to increase their share by a sales increase of 10.2 percent to 21 percent. Especially IDC emphasizes here Super Micro. The provider was able to increase its sales by 49.8 percent. With 448 millionaires dollars, he secured a market share of 2.9 percent.

Basically, the music currently plays in the ODMs. IDC analyst Lloyd Cohen attributes this to the fact that more and more large data center providers no longer see any added value in buying from one of the previous top 5 manufacturers and preferring their servers (so-called "white boxes") at lower prices and exactly theirs Have ideas produced in large quantities in an ODM.

Popular is this bypassing of the server brands, especially in the large cloud service providers. "The hyperscaler group made the biggest boost in new purchases in the second quarter," said Kuba Stolarski, IDC Research Director Computing Platforms. They are led by Amazon, which shipped just over 10 percent of all servers shipped in the second quarter.

Stolarski also indicates a "progressive evolution of the role of cloud services in enterprise IT," but does not elaborate. One can assume, however, that it means the relocation of services to the cloud, which then leads to a decreasing demand from servers or, as already stated above, at least high-end servers in the company's own data center.

This is also indicated by the breakdown of market development by geographic region. Central and Eastern Europe was the region with the highest growth in the past quarter, with an increase of 13.5 percent compared to the same quarter of the previous year. This could indicate that cloud operators are upgrading with regard to the 2018 coming DSGVO. But it could also be proof that regional and national cloud providers are increasingly coming into business.

Central and Eastern Europe has thus even outperformed the otherwise impressive growing Asia region with an increase of 12.9 percent. The United States is in the market trend with an increase of 7.1 percent. On the other hand, growth in Western Europe was slower than in the market as a whole , possibly due to various Brexit uncertainties and the resulting deferred purchases, with growth of 2.7 percent.