Worldwide server revenue declined 1.9 percent in Q4 2016

The worldwide server revenue declined 1.9 percent year over year in the fourth quarter of 2016, according to Gartner. Shipments fell 0.6 percent from the fourth quarter of 2015. In all of 2016, worldwide server shipments grew 0.1 percent, but server revenue declined 2.7 percent.

"There were some distinct factors that produced the final results for 2016," said Jeffrey Hewitt, research vice president at Gartner. "Hyperscale data centers (e.g., Facebook, Google) grew and, at the same time, drove some significant server replacements. Enterprises grew at a lower rate as they continued to leverage server applications through virtualization and in some cases, service providers in the cloud."

Positive growth in shipments and revenue for Asia/Pacific
From a regional perspective, Asia/Pacific was the only region to exhibit positive growth in both shipments and revenue in the fourth quarter of 2016. All other regions declined, with Latin America experiencing the largest decline in shipments with 12.2 percent, while the Middle East and Africa declined 14.7 percent in terms of revenue.

Hewlett Packard Enterprise (HPE) led the worldwide server market based on revenue in the fourth quarter of 2016 (see Table 1). The company ended the year with $3.4 billion in revenue for the fourth quarter of 2016 for a total share of 22.9 percent worldwide. However, revenue was down 11 percent compared with the same quarter in 2015. Of the top five global vendors, only Dell and Huawei exhibited growth for the quarter, increasing 1.8 percent and 88.4 percent, respectively.

Dell leads in worldwide server shipments
Dell grew 6.5 percent and moved into the No. 1 position in worldwide server shipments in the fourth quarter of 2016, with 19.1 percent of the market. HPE experienced a decline of 19.4 percent and fell to the second spot with 17.2 percent market share. Huawei experienced the strongest shipment growth in the fourth quarter of 2016, increasing 64 percent over the same period last year (see Table 2).

x86 server demand increased in revenue by 1.1 percent, however, shipments declined 0.3 percent in the fourth quarter of 2016.

Results for 2016
In 2016, worldwide server shipments increased 0.1 percent, while revenue declined 2.7 percent. "x86 servers continue to be the predominant platform used for large-scale data center build-outs across the globe, and the growth of integrated systems (including hyperconverged integrated systems), while still relatively small as an overall percentage of the hardware infrastructure market, also provided a boost to the x86 server space for the year," said Mr. Hewitt. "The outlook for 2017 suggests that modest growth will occur being driven primarily by service provider build-outs while the enterprise will show a slight decline in unit purchases with only slight growth in revenue."

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