Last year was a good one for the server sector, according to IHS Markit. The firm found that server revenue grew 15% year over year, and it generated $81 billion in revenue, a 27% increase over 2018.
Shipments were 11.4 million, an 8% year-over-year increase. A strong fourth quarter with $22.8 billion in revenue and 12% quarter-over-quarter growth was pivotal to the successful annual results.
A year after becoming the server unit-shipment leader, white box vendors also went on to lead revenue share, with 20.2% in the fourth quarter of 2018. Dell EMC followed with 19.5%, HPE came in third with 16.7%. Rounding out the top five were Inspur with 7.9% and IBM with 6.6%. During the fourth quarter of 2018, these vendors also took the revenue share lead with Dell EMC (19.5%), HPE (16.7%), Inspur (7.9%) and IBM (6.6%).
The firm said that the drivers were healthy spending at North American and European enterprises, good cloud service provider investments and a large number of high-performance computing deployments by the government.
“We continue to expect an acceleration in worldwide compute demand will drive server shipment growth,” said IHS Markit Principal Analyst Vladimir Galabov. “As the number of connected devices ramps up, the effect of multitenancy is further diminished, and the average annual increase in compute capacity per general-purpose central processing unit slows, we are projecting an upward growth curve from now through 2023.”
The firm said that architecture diversification continued during the fourth quarter. Arm- and AMD-based servers were strong, and the first shipments arrived with AMD’s 7 nm GPU and Graphcore’s Intelligent Processor Unit co-processors.
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IHS Markit said that Tier 2 ISPs grew ahead of hyperscale cloud service providers, and it predicts that the trend will continue through 2023. The dynamic is that enterprises will favor Tier 2s as governments in Europe, the Middle East, Africa and Asia Pacific favor local cloud service providers. The report also said that hyper-converged infrastructure continued to grow with deployments at large enterprises. The dollar value of individual deals increased, a trend that is expected to continue this year.
Dramatic changes will keep server companies busy. “Increasing demand for compute at the edge, particularly from enterprises and telecommunication network providers, has spurred HPE, Lenovo, Inspur and other vendors to develop new server form factors that can withstand harsh weather conditions, dust and vibration,” Galabov said. “These new designs are set to disrupt the server market in 2019.”