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Worldwide Server Revenue Declined 5.8 Percent in the Third Quarter of 2016; Shipments Were Down 2.6 %


In the third quarter of 2016, worldwide server revenue declined 5.8 percent year over year, and shipments declined 2.6 percent from the third quarter of 2015, according to Gartner, Inc. Among the top five vendors, only Cisco increased revenue in the third quarter, while Huawei and Inspur Electronics saw growth in shipments. HPE, Dell and Lenovo all experienced declines in both server revenue and shipments.

"The server market was impacted during the third quarter of 2016 by generally conservative spending plans globally. This was compounded by the ability of end users to leverage additional virtual machines on existing x86 servers (without new hardware) to meet their server application needs," said Jeffrey Hewitt, research vice president at Gartner. "Server providers will need to reinvigorate and improve their value propositions to help end users justify server hardware replacements and growth, if they hope to drive the market back into a positive state."

All regions showed a decline in shipments except Eastern Europe, which posted growth of 0.9 percent. In terms of revenue, all regions except for Japan experienced a decline. Japan grew by 1.3 percent.

x86 servers declined 2.3 percent in shipments and 1.6 percent in revenue in the third quarter of 2016. All vendors in the top five except for Cisco experienced a decline in revenue. In x86 server shipments, only Huawei and Inspur Electronics experienced growth.

Despite a decline of 11.8 percent, HPE continued to lead in the worldwide server market, based on revenue, with 25.5 percent market share (see Table 1). Dell declined 7.9 percent, but maintained the second spot in the market with 17.5 percent market share. Lenovo secured the third spot with 7.8 percent of the market. IBM dropped to the fifth position and experienced the largest decline among the top five vendors.

Table 1
Worldwide: Server Vendor Revenue Estimates, 3Q16 (U.S. Dollars)

Company
3Q16
Revenue
3Q16 Market Share (%)
3Q15
Revenue
3Q15 Market Share (%)
3Q15-3Q16 Growth (%)
HPE
3,247,087,045
25.5
3,682,417,477
27.3
-11.8
Dell
2,227,185,685
17.5
2,419,231,403
17.9
-7.9
Lenovo
994,447,261
7.8
1,065,664,119
7.9
-6.7
Cisco
929,440,000
7.3
885,600,000
6.6
5.0
IBM
889,723,595
7.0
1,327,761,197
9.8
-33.0
Others
4,426,866,909
34.8
4,120,053,348
30.5
7.4
Total
12,714,750,495
100.0
13,500,727,543
100.0
-5.8
Note: Beginning in the second quarter of 2016, HPE's server sales in China are reflected in H3C.
Source: Gartner (November 2016)

HPE secured the No 1 position in server shipments in the third quarter of 2016, with 18.3 percent of the market (see Table 2). Despite a decline of 9.8 percent, Dell secured the second spot with 16.8 percent market share. Huawei and Inspur were the only vendors in the top five to increase server shipments in the third quarter of 2016.

Table 2
Worldwide: Server Vendor Shipment Estimates, 2Q16 (Units)

Company
3Q16
Shipments
3Q16 Market Share (%)
3Q15
Shipments
3Q15 Market Share (%)
3Q15-3Q16 Growth (%)
HPE
493,268
18.3
613,101
22.2
-19.5
Dell
452,383
16.8
501,262
18.1
-9.8
Lenovo
228,097
8.5
242,005
8.8
-5.7
Huawei
163,355
6.1
134,163
4.9
21.8
Inspur Electronics
119,943
4.5
99,417
3.6
20.6
Others
1,234,567
45.9
1,172,725
42.4
5.3
Total
2,691,613
100.0
2,762,672
100.0
-2.6
Note: Beginning in the second quarter of 2016, HPE's server sales in China are reflected in H3C.
Source: Gartner (November 2016)

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