2016 Server Market - HP #1 in Revenue, Dell #1 in units sold
Versus the PC or Smartphone markets, the server market is both hard to provide a pure apples-to-apples comparison and includes a wide portfolio of products and price points. But it's interesting to take a look and see where the market is..
According to Gartner and IDC here are the latest market statistics as of Q2 2016.
About 2.7M servers were sold in Q2 of 2016. This includes both x86 (Intel/AMD) and Non-X86 (IBM Power / Sun Sparc).
HPE is #1 in terms of revenue with 3.2B even though that's a 6.6% decline from 2015. Dell is #2 @ 2.5B with nearly a 10% increase over 2015. IBM is third at $1.2B and Lenovo (who bought IBMs X86 business in 2014) is fourth at $968M and Cisco rounds out the top 5 with $858M.
Of note is the "Other" category - which sold some $4.6B in Q2. The other category includes the Original Design Manufacturers (ODM) that supply folks like Google, AWS and MS Azure.
But it's a different story when you look at the rankings from a units sold perspective...
Dell is #1 with 529K units sold - a 8.9% growth over 2015. HP is #2 with 474K units sold - a nearly 19% decline over 2015. Lenovo is 3rd with 235K units sold with Huawei and Inspur with 139K and 120K respectively. Once again though the "other" category was 1.2M units. In fact IDC calls out an ODM category with over 1M units sold. And notice neither IBM or Cisco make the top 5.
Versus HP and IBM, Dell is not in the Non-X86 business so has to sell a much larger number of servers to achieve their revenue numbers. Doing some simple math the revenue / unit for HPE is around $6,760 as compared to Dell at around $4900 / unit. So to reach HPEs revenue levels Dell would have to sell some 655K units - quite a jump from where they are now.
While it was not called out in any of the reports, the question will be what is going to happen with VCE, the EMC/Cisco/VMware partnership. Cisco sold its interest in VCE to EMC after a falling out over VMware's purchase of SDN developer Nicira that is now NSX. And while Cisco also has a relationship with NetApp and their FlexPod line as well as a new partnership with Nutanix - the question will be how long will the VCE partnership last and what will the impact to Cisco be.
Where the industry is seeing the biggest declines is in Non-X86 revenue. According to IDC, Non-X86 revenue fell 21.6% in Q2 of 2016. In recent years companies are moving their Oracle, SAP and other ERP/SCM and transactional applications to x86 with Linux versus RISC/Unix - like AIX.
I believe this trend will continue. For many years to get scale the approach was to grow the platform vertically, meaning more CPUs, RAM, etc in a single chassis. But that is an expensive proposition. Scale Up RISC is much, much more expensive than X86 scale out and so companies are moving there as quickly as they can.
With that said, the challenge for all of the traditional Server OEMs will be the cloud and ODMs. While some of these companies have developed ODM capabilities, the continued growth in cloud will reduce traditional on premise purchases. Combine higher CPU Core densities, large RAM and virtualization -and customers need fewer servers to support their workloads.
Bottom line is in the server market - For OEMs there is HPE, Dell then everyone else. But there is an ever growing ODM market which may outpace them all. In fact is often stated that Intel's largest server chip customer is not HPE or Dell, but Google.
According to Gartner and IDC here are the latest market statistics as of Q2 2016.
About 2.7M servers were sold in Q2 of 2016. This includes both x86 (Intel/AMD) and Non-X86 (IBM Power / Sun Sparc).
HPE is #1 in terms of revenue with 3.2B even though that's a 6.6% decline from 2015. Dell is #2 @ 2.5B with nearly a 10% increase over 2015. IBM is third at $1.2B and Lenovo (who bought IBMs X86 business in 2014) is fourth at $968M and Cisco rounds out the top 5 with $858M.
Of note is the "Other" category - which sold some $4.6B in Q2. The other category includes the Original Design Manufacturers (ODM) that supply folks like Google, AWS and MS Azure.
But it's a different story when you look at the rankings from a units sold perspective...
Dell is #1 with 529K units sold - a 8.9% growth over 2015. HP is #2 with 474K units sold - a nearly 19% decline over 2015. Lenovo is 3rd with 235K units sold with Huawei and Inspur with 139K and 120K respectively. Once again though the "other" category was 1.2M units. In fact IDC calls out an ODM category with over 1M units sold. And notice neither IBM or Cisco make the top 5.
Versus HP and IBM, Dell is not in the Non-X86 business so has to sell a much larger number of servers to achieve their revenue numbers. Doing some simple math the revenue / unit for HPE is around $6,760 as compared to Dell at around $4900 / unit. So to reach HPEs revenue levels Dell would have to sell some 655K units - quite a jump from where they are now.
While it was not called out in any of the reports, the question will be what is going to happen with VCE, the EMC/Cisco/VMware partnership. Cisco sold its interest in VCE to EMC after a falling out over VMware's purchase of SDN developer Nicira that is now NSX. And while Cisco also has a relationship with NetApp and their FlexPod line as well as a new partnership with Nutanix - the question will be how long will the VCE partnership last and what will the impact to Cisco be.
Where the industry is seeing the biggest declines is in Non-X86 revenue. According to IDC, Non-X86 revenue fell 21.6% in Q2 of 2016. In recent years companies are moving their Oracle, SAP and other ERP/SCM and transactional applications to x86 with Linux versus RISC/Unix - like AIX.
I believe this trend will continue. For many years to get scale the approach was to grow the platform vertically, meaning more CPUs, RAM, etc in a single chassis. But that is an expensive proposition. Scale Up RISC is much, much more expensive than X86 scale out and so companies are moving there as quickly as they can.
With that said, the challenge for all of the traditional Server OEMs will be the cloud and ODMs. While some of these companies have developed ODM capabilities, the continued growth in cloud will reduce traditional on premise purchases. Combine higher CPU Core densities, large RAM and virtualization -and customers need fewer servers to support their workloads.
Bottom line is in the server market - For OEMs there is HPE, Dell then everyone else. But there is an ever growing ODM market which may outpace them all. In fact is often stated that Intel's largest server chip customer is not HPE or Dell, but Google.
Comments
Post a Comment