Dell Dominates Global Server Market In Q2

With strong market-share and sales growth numbers, Dell Technologies dominated the global server market in the second quarter, besting all the industry's other major players for the first time and putting space between itself and archrival Hewlet Packard Enterprise, according to a recent report from research firm IDC.

To become the quarter's king of the worldwide server market, Dell claimed nearly 20 percent market share and more than 50 percent sales growth. HPE's market share slipped and its revenue growth trailed Dell's by a wide margin, according to IDC.

For Dan Serpico, CEO of FusionStorm, a large San Francisco-based data center solution provider that works with Dell, Dell's server business has all the most important ingredients for growth and market domination. FusionStorm's server business with Dell is growing at a double-digit year-over-year clip, Serpico said.

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"Our server business is taking off," Serpico said, "and it's because of Dell's superior technology, its great channel program and its complete and complementary portfolio. It's also testimony to the incredible connection FusionStorm has with Dell in the field, in R&D and in marketing and lead generation."

Dell server sales totaled $4.2 billion during the quarter, a year-over-year increase of almost 53 percent. The Round Rock, Texas, company's market share was 18.8 percent for the quarter, up from 17.7 percent a year prior, IDC said.

The results put Dell in the top spot in IDC's quarterly server vendor sales ranking for the first time, overtaking perennial market leader HPE, which saw a far smaller sales increase and a notable market-share dip.

Palo Alto, Calif.-based HPE's market share dipped to 16.6 percent from 21.4 percent a year prior, according to the IDC report. Server sales were $3.7 billion for the quarter, up slightly less than 12 percent from the $3.3 billion in the same period a year before.

HPE's dip in the global market is perhaps a side effect of a change in strategy the company made last year. As part of a shift to focus on higher-growth, more profitable segments of the server market, HPE made a decision last fall to exit the market for commodity servers for Tier 1 hyper-scale cloud providers.

"We expect to continue to grow the business despite the fact that we continue to de-emphasize our focus on that commoditized server business," HPE President Antonio Neri said in a conference call to discuss financial results late last month. Those results were well above Wall Street expectations.

"This quarter, as you can see, we grew the business 5 percent, and if you take out the Tier 1, up 10 percent," Neri said. "And the reason why is it's because obviously the demand is there. And ultimately, the strategic growth categories continue to grow at a healthy pace, and we continue to gain share in those particular segements."

For example, HPE's hyper-converged infrastructure portfolio grew at a 130 percent clip in its most recent quarter, and is poised to become a $1 billion business, Neri said.

The gap between the server market's top two players – Dell and HPE – and the rest of the field remained wide in the second quarter, even as those competitors posted striking results in the IDC ranking.

IBM and Lenovo were in a virtual tie for the third spot in the IDC report. IBM's global server revenue was $1.64 billion, representing 57 percent growth. Lenovo's quarterly server sales were $1.55 billion, up nearly 86 percent year over year.

IBM and Lenovo were followed by two firms that were also in a near tie. With about $1.09 billion in sales in the quarter, China's Inspur continued its rapid growth pace, up 112 percent year over year.

Cisco Systems, with about $1.1 billion in sales, boasted growth of better than 22 percent, but saw its market share dip to 4.8 percent from 5.6 percent a year ago.

Huawei's server sales topped out at just under $1 billion, sporting growth of about 77 percent year over year, and a market-share uptick to 4.3 percent from 3.5 percent a year ago.