Worldwide server market shows continued growth

“DRAM prices started to come down, increasing demand for memory-rich configurations to support emerging workloads such as artificial intelligence (AI) and analytics kept buoying server prices. Product managers should market higher memory content servers to take advantage of DRAM oversupplies.”

Dell EMC secured the top spot in the worldwide server market based on revenue in the fourth quarter of 2018 (see Table 1). Dell EMC ended the year with 20.2 per cent market share, followed by Hewlett Packard Enterprise (HPE) with 17.7 per cent of the market. Huawei experienced the strongest growth in the quarter, growing 45.9 per cent.

In server shipments, Dell EMC maintained the No. 1 position in the fourth quarter of 2018 with 16.7 per cent market share (see Table 2). HPE secured the second spot with 12.2 per cent of the market. Both Dell EMC and HPE experienced declines in server shipments, while Inspur Electronics experienced the strongest growth with a 24.6 per cent increase in shipments in the fourth quarter of 2018.

The x86 server market increased in revenue by 27.1 per cent, and shipments were up 8.7 per cent in the fourth quarter of 2018.

Full-Year 2018 Server Market Results

In terms of regional results, in 2018, Asia/Pacific and North America posted strong growth in revenue with 38.3 per cent and 34 per cent, respectively. In terms of shipments, Asia/Pacific grew 17.6 per cent and North America grew 15.9 per cent year over year.

EMEA grew 3.1 percent in shipments and 20.4 percent in revenue. Latin America grew 20.9 per cent in revenue, but declined 4.4 per cent in shipments. Japan grew 3.3 per cent in revenue, 2.1 per cent in shipments.

EMEA Server Market Results in the Fourth Quarter of 2018 and Full Year

In the fourth quarter of 2018, server revenue in EMEA totalled more than $4.4 billion, growing 12.3 per cent from the fourth quarter of 2017 (see Table 3). Server shipments totalled 586,000 units, a growth of 6.6 per cent year over year (see Table 4).

“The EMEA market ended the fourth quarter, and the overall year, positively with both good shipment and good revenue growth,” said Adrian O'Connell, senior research director at Gartner. “Although these levels of growth were positive, a large part of the revenue increase was due to higher component costs — which lead to higher system prices. It’s also important to recognise that total shipments were lower in 2018 than they had been in 2016.”

In revenue terms, all of the top five vendors except IBM grew in the fourth quarter of 2018. HPE retained the No. 1 position and increased its revenue share. Second-ranked Dell EMC saw the strongest growth from the fourth quarter of 2017, but third-ranked IBM experienced a revenue decline. “EMEA continues to be a strong region for HPE, and the EMC acquisition continues to drive very good server revenue growth for Dell EMC, but the cyclical nature of the high-end server business is currently hampering IBM,” said Mr O'Connell.

As in the rest of 2018, while the revenue results are positive, the moderate shipments — which continue to be lower than in previous years — indicate a relatively weak underlying demand across the EMEA market.

“The price increase due to higher component costs will ease as we go through 2019,” said Mr O'Connell. “Key component supply levels have already significantly eased and we expect this to be passed on to the users in the form of lower server prices as we go through 2019. So, the outlook for revenue will certainly be weaker than in 2018, and the relatively weak level of underlying demand across EMEA also looks set to continue.”