On a year-over-year basis, volume systems experienced 3.9% revenue growth. This was the fourth consecutive quarter that volume system demand increased year over year. At the same time, demand for midrange and high-end systems experienced year-over-year revenue declines of -4.8% and -25.6% respectively in 1Q14. The midrange and high-end markets were impacted by difficult year-over-year comparisons combined with transitions in the technology refresh cycles typical for these segments.
"The server market continues to be heavily influenced by the emergence of the 3rd Platform as mobile, Cloud, Big Data, and social enablement drive significant hyperscale server deployments globally", stated Matt Eastwood, Group Vice President and General Manager, Enterprise Platforms at IDC. "At the same time, traditional client-server workloads continue to drive investment in private Cloud facilitation as traditional SMB and enterprise customers drive consolidation and automation deeper into their environments. The net effect is an increasing concentration of computing power into fewer and larger enterprise and service provider datacenters around the world."
HP held the number 1 position in the worldwide server market with 26.5% factory revenue share for 1Q14. HP's -2.0% revenue decline included stable demand for x86-based ProLiant servers and continued weakness in Itanium-based Integrity server revenue. IBM held the number 2 spot with 19.1% share for the quarter as factory revenue decreased -25.4% compared to 1Q13. Demand for IBM's x86-based System x servers and System z mainframes declined sharply year over year. Dell maintained the third position with 18.0% factory revenue market share in 1Q14 as factory revenue declined -3.2% compared to 1Q13. Cisco, Fujitsu, and Oracle ended the quarter in a three-way statistical tie for the number 4 position with 5.7%, 5.0%, and 4.9% factory revenue share respectively. Cisco's 1Q14 factory revenue increased 37.0% compared to 1Q13, gaining 1.6 points of market share, and Oracle's factory revenue was up 1.9% year over year in 1Q14.
Demand for x86 servers improved in 1Q14 with revenues increasing 4.9% year over year in the quarter to $8.9 billion worldwide as unit shipments increased 2.5% to 2.1 million servers. HP led the market with 29.6% revenue share based on 0.4% revenue growth over 1Q13. Dell retained second place, securing 22.0% revenue share.
Non x86 servers experienced a revenue decline of -25.2% year over year to $2.0 billion representing 17.9% of quarterly server revenue. This was the eleventh consecutive quarter of revenue decline in the non-x86 server segment. IBM leads the segment with 57.2% revenue share following a year-over-year revenue decline of -31.0% when compared with the first quarter of 2013.
Blade servers, which are highly leveraged in enterprise's virtualized environments, increased 2.3% year over year to $2.0 billion. Blades now account for 18.0% of total server revenue. HP maintained the number 1 spot in the blade server market in 1Q13 with 43.7% revenue share; Cisco held the second position in the blade market with 24.4% revenue share; and IBM held the third position with 12.3% revenue share.
Density Optimized servers, utilized by large heterogeneous data centres, experienced weaker demand in 1Q14. Revenue declined -10.8% year over year in 1Q14 to $649 million as unit shipments decreased -6.0% to 215,567 servers. Density Optimized servers now represent 6.0% of all server revenue and 10.4% of all server shipments.
"Market observers should not be fooled by the decline in density optimized server revenue this quarter", stated Kuba Stolarski, Research Manager, Servers at IDC. "This quarter's decline in density optimized sales is indicative of temporarily lower demand from one or two very large customers who utilize density optimized servers for particular workloads. The demand should return shortly, at which point density optimized servers will return to growth. Furthermore, the decline in density should not be misinterpreted as an indicator of overall cloud Hyperscale server demand. Although dense form factors are used extensively in large Cloud Hyperscale environments, many of the largest Cloud service providers continue to favour rack-optimized servers in their data centres."
IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers, midrange servers and high-end servers. The revenue data is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments.
IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture.