Reports: 2012 Server Revenue Down, Shipments Mixed

Poor sales of non-industry standard servers combined with a weak European market made a soft fourth quarter the cap to a full-year of lackluster server sales for 2012, according to new reports from analyst firms Gartner and IDC.

Stamford, Conn.-based Gartner this week estimated that server vendors shipped 2.5 million servers in the fourth quarter of 2012, down 0.2 percent compared to 2011 server shipments. However, increased average selling prices meant that total revenue for the quarter was up 5.1 percent over last year to reach $14.6 billion.

For all of 2012, shipments grew 1.5 percent over 2011 to reach 9.7 million units, bringing server vendors a total of $52.5 billion revenue, down 0.6 percent over last year, Gartner estimated.

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The Gartner server revenue estimates tracked closely with those of rival analyst firm, Framingham, Mass.-based IDC, although the two companies had significantly different shipment estimated.

IDC this week said server shipments in the fourth quarter fell 3.9 percent over last year to 2.1 million units, while revenue from those shipments rose 3.1 percent to reach $14.6 billion.

Full-year 2012 server shipments were down 1.5 percent over 2011 to 8.1 million units, causing total revenue for those servers to fall 1.9 percent to $51.3 billion, IDC estimated.

The list of the top five server vendors in terms of revenue was the same for both Gartner and IDC.

Gartner said IBM sold $5.1 billion in servers in the fourth quarter, up 8.9 percent over last year. It was followed by Hewlett-Packard, which saw revenue drop 3.3 percent over last year; Dell, which saw revenue rise 1.2 percent; Oracle, which suffered an 18 percent drop; and Fujitsu, which enjoyed an 8.6 percent rise.

For the entire year, IBM was the server revenue king despite a 3.2 percent drop in revenue to $15.6 billion. HP came in at No. 2 with a 7.6 percent drop in revenue. They were followed by Dell, which saw revenue for the year rise 3.6 percent; Oracle, whose revenue fell 16.3 percent; and Fujitsu, which enjoyed a 14.8 percent rise in revenue.

For the fourth quarter of 2012, IDC estimated IBM's revenue at $5.3 billion, up 3.1 percent over that of the fourth quarter of 2011. It was followed by HP, which saw revenue fall 3.2 percent; Dell, which had a 5.7 percent increase; Oracle, whose revenue fell 17.8 percent; and Fujitsu, which had a 5.3 percent rise.

NEXT: Mainframes, x86 Servers Up, But Unix Servers Fall

For all of 2012, IBM retained its traditional lead despite a revenue decrease of 4.3 percent to $15.7 billion, IDC said. It was followed by HP with a 7.5-percent revenue drop, Dell with a 4.5 percent rise, Oracle with a 17.4 percent drop, and Fujitsu with a 16.9 percent drop, IDC said.

A major reason for IBM's success in the server business is its strong System z mainframe business. IDC said IBM's mainframe revenue in the quarter was the highest quarterly revenue the company had in over a decade. HP, on the other hand, did very well with its ProLiant x86-based server revenue, but it suffered from a big drop in its Itanium-based Integrity Unix server line, IDC said.

Both IDC and Gartner said Cisco was the real winner in the x86 server market. IDC estimated that Cisco's fourth-quarter 2012 UCS server revenue reached $480 million in the fourth quarter, up 50.7 percent over the same period in 2011. Gartner, meanwhile, estimated that Cisco shipped nearly 209,000 UCS servers in the fourth quarter, up 47.0 percent over last year. That meant revenue for Cisco of over $1.6 billion, up 56.8 percent over last year, Gartner said.

The North American market was by far the best in terms of growth in the fourth quarter of 2012, according to Gartner. North American unit shipments rose 5.5 percent over last year, with revenue up 16.3 percent during that time.

The server business in Europe, the Middle East and Africa (EMEA), on the other hand, was a big drag on the overall server business. Gartner estimated fourth-quarter EMEA server shipments fell 10.4 percent, leading to a revenue decline of 7.4 percent over last year.

Windows server sales in the fourth quarter of 2012 rose 3.2 percent to $6.7 billion, while Unix server sales fell 24.1 percent to $2.6 billion, IDC said.

However, the quarter was a resounding success for servers running alternative operating systems. IDC estimated Linux server sales rose 12.7 percent over last year to $3.0 billion thanks to strong demands for high-performance computing and cloud infrastructure deployments. IBM mainframe sales rose 55.6 percent over last year to $1.8 billion thanks to a technology refresh and the consolidation of some enterprise Linux workloads into IBM System z mainframes, IDC said.

For all of 2012, blade server revenue rose 3.2 percent despite a fall in shipments of 3.8 percent, Gartner said. That left HP the top shipper of blade servers with a 43.9-percent market share, followed by IBM at 18.4 percent and Cisco at 12.5 percent.

PUBLISHED March 1, 2013