There Could Be Modest Growth in Server Shipments This Year, but Revenues Will Likely Drop

There may be “modest growth” when it comes to global server shipments in 2014, according to recent predictions from research firms. For example, Channelnomics reports that 2014 may see server shipments increase, but revenues will “continue to slide” during the year.

The predicted increases for 2014, according to Gartner (News - Alert), “will continue to be buffered in the enterprise by the use of x86 server virtualization to consolidate physical machines as they are replaced.”

Looking back at last year, there was a 2.1 percent increase in server shipments. Yet, 2013 was also marked by a 4.5 percent drop in revenue, Gartner said.  Also in 2013, x86 servers were the predominant platform used for large-scale data centers especially those in North America. It was reported too that demand for x86 servers and blade servers is “strong, as they are the mainstay of the data centers and cloud infrastructure,” Channelnomics said.

x86 blade servers saw a revenue increase of 0.8 percent and a shipment decrease of 2.6 percent during 2013. HP had the most x86 blade server shipments with a 40.3 percent market share. Cisco (News - Alert) was in second place when it came to 2013 market share.

During Q4 of 2013, server revenue dropped 6.6 percent. For example, IBM saw its server revenue drop 28.9 percent. Dell experienced a server revenue decline of 0.5 percent during Q4, and Oracle (News - Alert) saw a 4.7 percent decline. On the other hand, HP had a 6 percent increase in server revenue and Cisco Systems saw a 34.5 percent jump.

IBM (News - Alert) had the most shipment declines among server vendors, with a 20.6 percent decline in server shipments during 2013. Dell saw a 5.4 percent drop in server shipments. Other top vendors saw increases ranging from 3.5 percent for Fujitsu (News - Alert) to 8.7 percent for HP – during the year. But Huawei Technologies, which did not earn enough revenue to be listed in the top five vendors, saw an impressive 188 percent increase in shipments during 2013, according to Channelnomics.

"2013 presented some pronounced differences in various server market segments," Jeffrey Hewitt, research vice president at Gartner, said in a statement. "We've seen ongoing growth in Web-scale IT deployments, while the enterprise remained relatively constrained."

"In terms of hardware platform types, mainframe and RISC/Itanium Unix platform market performance kept overall revenue growth in check," Hewitt added.

Based on sector analysis, it appears that increased competition may be causing prices to drop. There is pressure on vendors and resellers to offer discounts, reports add.