Virtualization Affects Server Shipments Despite Revenue Growth


Businesses are moving more of their IT functions to the cloud as the understanding for this services continues to grow. This has the effect of reducing the spending on capital investments made in the enterprise. Since IT is plays the part of an enabler rather than the core operation in most organizations, it makes financial sense to handover these functions to managed service providers. This has had the effect of reducing spending on global server infrastructure.

Server revenue for 2013 was down 4.5% despite the growth in server shipments by 2.1%. Gartner bods peg these on Web-scale IT deployments. 2014 is expected to be equally bleak for the server market with stuttering growth mainly credited to x86 server virtualization. The scoresheet from Q4 2013 gives HP a 28.1% share of the global server market. HP’s revenues for this period stood at $3.8 bn. The company has moved in first after sensing IBM’s weakness in the server market and it stands to gain from the divestiture of the IBM server division to Lenovo.

IBM has a 26.5% market share as of Q4/13 with revenues of $3.6 bn. The company’s share had however declined compared to Q4/2012 when it controlled a 34.9% share. At 15.2% market share, Dell made 2.1 bn in revenue in the fourth quarter of 2013. For the same period Cisco commanded 4.7% with revenues of $646 mn. The largest growth in server shipments was recorded from Huawei at 187.9%.