HPE's Worldwide Server Market Leadership Slips As Dell, IBM Gain Share

Worldwide Server Sales For Q3 2017

Dell Technologies and IBM are winning share in the global server market from leader Hewlett Packard Enterprise, which lost more than 4 percentage points in market share during the third quarter of 2017, according to data from IT research firm IDC. Of the top five leading vendors, Lenovo saw the biggest revenue percentage drop year over year, while original design manufacturer (ODM) direct sales jumped 45 percent.

Worldwide server revenue increased 20 percent to $17 billion in the third quarter of 2017 compared with the same quarter one year ago as the market strengthened after several slow quarters. Server unit shipments grew 11 percent year over year to 2.67 million worldwide. CRN breaks down IDC's market data for the top five server vendors worldwide.

HPE-New H3C Group

Q3 2017 Market Share: 19.5%

Q3 2016 Market Share: 23.7%

HPE-New H3C Group remains the leader in the global server market with 19.5 percent share. However, sales decreased 1 percent and the company's market share dropped 4.2 percentage points year over year. Palo Alto, Calif.-based HPE generated $3.31 billion in revenue, down from $3.35 billion during the same quarter in 2016. HPE server shipments also dropped to 501 million units in third-quarter 2017 from 510 million in third-quarter 2016 .

" HPE has been pivoting away from hyper-scaler business and focusing on the enterprise, hurting year-over-year comparisons in the short term, but showing strength in the enterprise," said Kuba Stolarski, IDC's research director of computing platforms.

Dell Technologies

Q3 2017 Market Share: 18.1%

Q3 2016 Market Share: 15.7%

Dell Technologies grew sales a whopping 38 percent year over year, generating $3.07 billion in sales compared with $2.22 billion in third quarter 2016. The Round Rock, Texas-based company led the pack in server shipments during the quarter with 503 million units shipped. Dell's server share increased 2.4 percentage points year over year, capturing 18.1 percent of the total market in third quarter 2017.

Stolarski said Dell's server growth was due to the "the strong synergy between its server team and the storage team incorporated from the EMC acquisition."

IBM

Q3 2017 Market Share: 6.4%

Q3 2016 Market Share: 6.1%

IBM grew server revenue 26.5 percent year over year to $1.1 billion in the third quarter. " IBM has demonstrated that the enterprise still has space for non-x86 systems, growing the newly refreshed System z business by 64 percent year over year to $673 million," said Stolarski. The Armonk, N.Y.-based company's market share slightly increased 0.3 percentage points to 6.4 percent year over year.

Cisco

Q3 2017 Market Share: 5.8%

Q3 2016 Market Share: 6.6%

The San Jose, Calif.-based networking leader generated $993 million in revenue during the quarter, up 7 percent year over year. However, Cisco's market share dropped 0.8 percentage points to 5.8 percent compared with the same quarter one year ago.

Lenovo

Q3 2017 Market Share: 5.1%

Q3 2016 Market Share: 7%

Out of the top five market leaders, Lenovo witnessed the largest sales percentage decrease year over year, dropping 12.6 percent to $861 million in third quarter 2017. The Morrisville, N.C.-based vendor also saw the biggest drop in server shipments year over year, shipping 152 million units compared with 227 million units in third-quarter 2016, representing a 33 percent decrease.

ODM Direct

Q3 2017 Market Share: 24.3%

Q3 2016 Market Share: 20%

ODM direct server sales saw a year-over-year revenue increase of 45 percent to $4.12 billion compared with $2.83 billion in third-quarter 2016. IDC's Stolarski said hyper-scalers continue to drive volume demand, with Amazon still leading the charge while Google and Facebook are also ramping up their server deployments.

Market Segment Overview

Volume server revenue increased by 19 percent to $14.2 billion, while midrange server revenue grew 27 percent to $1.4 billion during third-quarter 2017. High-end systems grew 19 percent to $1.3 billion, benefiting from IBM's z14 launch this quarter, according to IDC. Demand for x86 servers increased 20 percent year over year to $15.4 billion in revenue. Non-x86 servers grew 15 percent year over year to $1.5 billion.