Q1 Server Market: Dell EMC Gains Ground On No. 1 HPE

Scrapping For Share As The Market Slows

Dell EMC was the only major vendor to notch server revenue and shipment growth in the first quarter as a market waiting for the next major processor and moving away from high-end hardware handed Cisco, Hewlett Packard Enterprise and Lenovo declines that were in some cases dramatic.

Worldwide server revenue declined 4.6 percent year over year in the first quarter, according to research firm IDC. IDC said the slowdown is the result of customers, especially hyper-scale service providers, waiting for Intel's new Skylake processors to hit the market later this year, as well as dramatically rising memory prices and the market's continued move away from high-end servers.

Server shipments were up 1.4 percent year over year during the quarter, according to IDC. Dell EMC saw minimal growth in shipments, while Chinese data center upstarts Huawei and Inspur both increased shipments by double digits year over year.

Dell EMC Makes Revenue Gains As Others Fall

Of the major vendors included in IDC's data, only Dell made server revenue gains during the first quarter, posting a 4.7 percent increase and finishing the period with revenue of $2.4 billion. That's in stark contrast to HPE, which saw server revenue fall nearly 16 percent to $2.9 billion and Cisco, which posted a 3 percent revenue decline to finish the quarter at about $825 million. Lenovo's first-quarter server revenue fell 16.5 percent year over year to $727 million.

Market-Share Battle Heats Up

Although it narrowed the gap, Dell EMC's revenue gain wasn't enough to boot HPE from the worldwide No. 1 position in server market share. HPE finished the quarter with 24.2 percent market share, down from 27.5 percent a year prior. Dell EMC, meanwhile, boosted its market share to 20.1 percent from 18.3 percent a year ago. Cisco's market share was about flat with the year-ago period at 7 percent versus 6.9 percent a year ago. Lenovo, which bought IBM's x86 server business about two years ago, finished the quarter with a 6.2 percent share of the market, down from 7 percent a year prior.

Dell EMC Takes Shipment Lead From HPE

Dell EMC shipped 465,000 servers in the first quarter, a tiny year-over-year gain, but enough to put it ahead of data center rival HPE, which shipped about 460,000 units, according to IDC. A year ago, the situation was reversed; During that period, HPE shipped 537,000 units compared with Dell EMC's 464,000.

Battlefront Opens In China

While the industry's biggest players duke it out at the top of the market, a battle is also brewing among Chinese vendors intent on making inroads as the market shifts toward lower-cost hardware. Lenovo is particularly vulnerable, as the China-based PC giant's server shipments fell more than 27 percent year over year to 146,000 units. At the same time, Huawei, which is also a newcomer to the global data center hardware market, shipped 119,000 units, an increase of nearly 33 percent year over year. Also, Inspur shipped nearly 99,000 units during the quarter, a year-over-year increase of about 13 percent.

Where The Chips Are Falling

According to IDC, midrange servers were the only segment of the market to see growth during the quarter, jumping 16.5 percent to $1.3 billion. So-called volume server revenue fell 3.4 percent to to $9.5 billion while demand for high-end systems dropped nearly 30 percent. IDC expects long-term declines in the high-end market.