Improved market conditions were seen across all three server classes - volume, midrange enterprise, and high-end enterprise. Volume systems experienced an 8.7% year-over-year revenue increase, the sixth consecutive quarter of positive growth for the segment. Midrange enterprise demand improved for the third time in the past four quarters, with a sharp 28.3% year-over-year revenue increase. Finally, the improving market conditions extended to the high-end enterprise segment, as quarterly revenue increased 14.2% when compared to 1Q10. This is the first time in eight quarters that all three segments of the server market have experienced a year-over-year revenue increase in the same quarter.
"Meaningful enterprise infrastructure refresh occurred across all geographies in the quarter. Although the public sector weakened, worldwide demand for servers across hosters, SMBs, and enterprise customers remained strong. This was the fourth consecutive quarter with double-digit year-over-year revenue growth as the market recovery extended from x86 servers to midrange Unix to high-end mainframe class systems for the first time in nearly three years", stated Matt Eastwood, group vice president, Enterprise Platforms at IDC. "This is evidence that heterogeneous systems remain critically important to customers addressing a wide range of workload needs in their data centres. As we moved into 2011, IDC predicted the technology refresh cycle would extend from volume- to value-oriented systems with somewhat longer planning horizons, and this is clearly happening."
HP held the number 1 position in the worldwide server market with 31.5% factory revenue share for 1Q11. HP's 10.8% revenue growth was led by improved demand for both x86-based ProLiant servers and Itanium-based Integrity servers. IBM held the number 2 spot with 29.2% share for the quarter as factory revenue increased 22.1% compared to 1Q10 and gained 2.4 points of share from a year ago. IBM experienced significant improvement for its Power Systems, while demand for System z servers and x86-based System x servers also remained strong.
Dell maintained third place with 15.6% factory revenue market share in 1Q11 factory revenue increased 9.7% compared to 1Q10 driven in part by strong demand from SMB customers. Oracle, which completed the 1-year anniversary of its Sun Microsystems acquisition on January 27, maintained the number 4 position with 6.5% factory revenue share in 1Q11. Oracle's 1Q11 factory revenue increased 13.6% compared to 1Q10, driven in part by improved demand for SPARC-based servers. Fujitsu rounded out the top 5 with 4.8% factory revenue share following a 15.6% year-over-year decline in server revenue. Finally, IDC initiated coverage of Cisco's UCS server platform in the 1Q11 Server Tracker. Cisco maintained 1.6% factory revenue share overall, with particular strength in x86-based blades in North America.
The market for non-x86 servers, including servers based on RISC, EPIC (Itanium-based), and CISC processors, increased 12.3% year over year to $4.0 billion in 1Q11. This is the second consecutive quarter in which non-x86 servers have exhibited positive growth and the first time in two years that non-x86 based system revenue has grown faster than the market overall. Growth in non-x86 server revenue was driven by improved demand for Unix servers and IBM System z platforms.
Unix servers experienced the first quarter showing year-on-year factory revenue improvement in 11 quarters, growing 12.5% when compared to 1Q10. IBM, HP, and Oracle all experienced improvement in Unix server revenue in the quarter, as worldwide Unix revenues were $2.6 billion, representing 21.8% of quarterly server revenue.
IBM's System z servers running z/OS experienced the third consecutive quarter of positive revenue growth, with 41.1% year-over-year growth in 1Q11 to $1.0 billion, representing 8.8% of quarterly server revenue worldwide. This was the third consecutive quarter that z/OS system revenue exceeded $1 billion.
Linux server demand increased for the sixth consecutive quarter in 1Q11, with revenue growing 16.6% to $2.0 billion when compared with the first quarter of 2010. Linux servers now represent 16.9% of all server revenue, up 0.7 points over 1Q10.
Microsoft Windows server demand also continued to show strong demand as Windows-based hardware revenue increased 10.1% year-over-year. Quarterly revenue of $5.8 billion for Windows servers represented 48.5% of overall quarterly factory revenue and 75.2% of all quarterly server shipments.
"The Unix server marketplace is seeing new market dynamics centred on technology refresh for mission-critical workloads; a new provider in Oracle, and a new product set across all of the top 4 Unix server vendors", stated Jean S. Bozman, research vice president, Enterprise Servers at IDC. "This segment was hard-hit in 2009 and 2010 during the economic downturn as customers deferred or delayed acquisition of midrange and high-end Unix servers. There is also continuing competition for enterprise workloads with non-Unix platforms. However, as IDC projected, there has been a return to growth in this segment in 2011, as customers' servers are being refreshed to carry forward Unix-specific, mission-critical workloads."
The blade market continued its strong growth in the quarter with factory revenue increasing 23.8% year over year, with shipment growth increasing by 5.4% compared to 1Q10. Overall, bladed servers, including x86, EPIC, and RISC blades, accounted for $1.8 billion in revenues, representing 15.2% of quarterly server market revenue. Nearly 90% of all blade revenue is driven by x86-based blades, which now represent 20.5% of all x86 server revenue. HP maintained the number 1 spot in the server blade market in 1Q11 with 50.0% revenue share, while IBM finished with 20.2% revenue share. Cisco and Dell rounded out the top 4 with 9.4% and 8.4% factory revenue share, respectively.
"Blade vendors fared well in the quarter, with the blade revenue growing at twice the rate of the total market. Blades represent a higher-value sale for server vendors, being increasingly deployed in converged systems to support virtual environments. The larger memory footprints and I/O interconnects needed have resulted in a continual increase in average selling prices for blade systems", stated Jed Scaramella, Research Manager, Enterprise Servers at IDC. "After several years of being a highly consolidated market where the top 3 vendor accounted for over 80% of blade revenue, the recent entry of Cisco has introduced a viable new competitor to the market."
Demand for x86 servers continued to improve in 1Q11, with revenues growing 12.0% in the quarter to $7.9 billion worldwide as unit shipments increased 2.6% to 1.9 million servers. HP led the market with 37.7% revenue share based on 11.6% growth over 1Q10. Dell retained second place, securing 23.5% revenue share, while IBM now holds 16.4% revenue share. Overall, this was the eighth consecutive quarter with year-over-year increases in average selling prices for x86 servers as both the mix of systems and average system configurations continue to move up-market, driving generally higher product margin for x86 ecosystem players. Additionally, this was the sixth consecutive quarter of year-over-year factory revenue growth for x86 servers with particular strength in Asia/Pacific and CEMA.
"As virtualization adoption matures in the x86 server market, IDC sees customers moving from consolidation towards more automated private cloud models for their IT needs. This drives a shift in focus towards lowering the cost per application through higher virtual machine server densities", stated Reuben Miller, senior analyst in IDC's Enterprise Servers group. "As x86 server technologies continue to improve efficiencies, customers are seeing increased benefits from moving more of their IT workloads to x86 servers."