Driven by enterprises and hyperscale service carriers, server vendor revenues reached a record high in the third quarter, according to a report.
For the fifth consecutive quarter, server revenue increased by double digits while also posting the highest total revenue ever for a single quarter, according to IDC. Worldwide server market revenue swelled 37.7% year over year to $23.4 billion during the most recent third quarter as worldwide shipments surged 18.3% year over year to 3.2 million units.
"The worldwide server market once again generated strong revenue and unit shipment growth due to an ongoing enterprise refresh cycle and continued demand from cloud service providers," said Sebastian Lagana, research manager, infrastructure platforms and technologies at IDC, in a prepared statement. "Enterprise infrastructure requirements from resource intensive next-generation applications support increasingly rich configurations, ensuring average selling prices (ASPs) remain elevated against the year-ago quarter. At the same time, hyperscalers continue to upgrade and expand their data center capabilities."
Although Amazon Web Services, Microsoft Azure and Google continuously upgrade their networks and services to keep up with increasing bandwidth demands, a recent report found their capex declined slightly in the third quarter.
Volume server revenue increased by 40.2% to $20 billion, while midrange server revenue grew 39.4% to $2 billion. High-end systems grew 6.9% to $1.3 billion, according to IDC.
The report also indicated that adoption of x86 servers by carriers and enterprises is starting to gain momentum. The demand for x86 servers increased 41% in the third quarter while posting $21.8 billion in revenues. By comparison, non-x86 servers grew 4% year over year to $1.6 billion.
While service providers and businesses can save money by buying cheaper off-the-rack servers, they also play a key role in splitting up network elements while separating vendor hardware and software functions. AT&T, Verizon and Colt Technology Services are among the service providers that are either looking at deploying x86 white boxes or are in the process of doing so.
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Vendor leaders, top regions
Dell maintained its top ranking as the largest sever vendor by accounting for 17.5% of the total worldwide server market revenue in the third quarter. Dell's revenues increased 33.3% in the quarter.
HPE/New H3C Group was the second largest supplier with 16.3% share of total vendor revenue, growing 14.8%. Inspur/Inspur Power Systems came in third with a share of 7.3%, and the new joint venture contributed to 156.5% growth year over year. Lenovo was fourth with a share of 6.2% on 67% growth. IBM, Huawei and Cisco rounded out the top five, all statistically tied with vendor revenue shares of 5.1%, 4.5% and 4.5%, respectively.
On the geographic front, Asia Pacific minus Japan was the fastest-growing region during the quarter with a 46.5% increase in year-over-year revenue growth. The US was a close second with 43.7% growth in the quarter while Europe, the Middle East and Africa grew 24.5%, Canada grew 20%, Japan grew 14% and Latin America grew 7.7%. China saw its third-quarter vendor revenues increase 67.1% year over year.