Server sales weak again in Q4; H-P/Cisco's share rises, IBM's plummets


With enterprise server sales under pressure and the cheap white-label servers used by the Googles and Amazons of the world gaining more ground, IDC estimates global server revenue fell 4.4% Y/Y in Q4, a decline steeper than Q3's 3.7%. Gartner estimates revenue fell 4.5%.

IDC thinks market leader H-P (HPQ), which posted relatively healthy enterprise hardware numbers for its January quarter, saw its share rise 260 bps Y/Y to 26.9%. #2 IBM, whose hardware ops had a brutal Q4, saw its share drop 910 bps to 26.8% in what's typically a seasonally strong quarter for the company.

#3 Dell is assigned a 14.5% share (+30 bps). #4 Cisco (CSCO), whose UCS server unit remains a bright spot, is given a 4.5% share (+130 bps). Following many quarters of share losses, engineered systems growth allowed #5 Oracle's (ORCL) share rose 10 bps to 4.1%.

White-label server sales, referred to by IDC as ODM Direct, soared 47% Y/Y, and now make up 6.4% of industry revenue. "Density-optimized" server sales, which include white-label gear and OEM offerings, soared 70%. H-P has a 34.9% share.

A positive for Intel (INTC): x86 server sales rose 7.8%, up from Q3's 2.8% clip. A positive for Red Hat (RHT): Linux server sales rose 14.4% vs. 5.6% in Q3, and now make up 28.5% of industry revenue. Windows server sales (45.7% of revenue) were nearly flat, Unix sales (13.6% of revenue) fell 20.2%.

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Comments (14)
  • Philip Marlowe
    , contributor
    Comments (1583) | Send Message
     
    Best bet on white label and density optimized servers: SMCI.
    27 Feb 2014, 07:13 PM Reply Like
  • Stock Market Mike
    , contributor
    Comments (3665) | Send Message
     
    AMD is another good bet, depending on whether you're bullish on ARM64 micro-servers or not.
    27 Feb 2014, 07:16 PM Reply Like
  • RLLH
    , contributor
    Comments (611) | Send Message
     
    Since IBM sold its server division, why is this an issue for them?
    27 Feb 2014, 07:16 PM Reply Like
  • Eric Jhonsa
    , contributor
    Comments (1276) | Send Message
     
    IBM is selling its x86 server division. It's holding onto its other server units (Power, mainframe).
    27 Feb 2014, 07:20 PM Reply Like
  • Momintn
    , contributor
    Comments (6073) | Send Message
     
    IBM sold their low end server business to Lenovo for $2.3B. But none of the hardware server revenue is reflected in the price of the stock, according to Trefis. Look at the last blue line:
    http://bit.ly/1dvZweH
    IBM will continue selling its server software. And as part of the deal, Lenovo plans to become a reseller of IBM storage systems and software.
    IBM has a close business partnership with Lenovo which has greatly benefited them in Asia.
    The day after the X86 server announcement, IBM had a major SDN server announcement. When SDN takes off, what has long been a hardware-oriented market will become a more software- and services-driven one. This could be a major disruption to the channel partners in the network space.
    28 Feb 2014, 08:59 AM Reply Like
  • Momintn
    , contributor
    Comments (6073) | Send Message
     
    When IBM launched its OpenDaylight Hydrogen-based SDN controller, it was only an early part of a longer-term, software-driven data center strategy that will stretch orchestration across networks, compute and storage.
    http://bit.ly/1fw1KLi
    28 Feb 2014, 09:08 AM Reply Like
  • markitos
    , contributor
    Comments (207) | Send Message
     
    And the all around winner is: Intel (of course)!
    27 Feb 2014, 07:30 PM Reply Like
  • Gary Schuster
    , contributor
    Comments (190) | Send Message
     
    I think the white-label servers have Intel processors. This is not a "loser's game" for Intel.
    27 Feb 2014, 08:38 PM Reply Like
  • User 1538861
    , contributor
    Comments (2) | Send Message
     
    Power is dead. IBM will try to make Power relevant with a Big Endian to Small Endian switch. But they are 5 yrs too late. Z series is the next to fall due to the cloud. Will probably take 3 to 5 yrs, but it's inevitable. And it's not the revenue from hardware that is the problem. Z series software revenue is based on MIPS. So when Z hardware declines in a few years, MIPS shipped will decline. And that will hammer software revenues.
    27 Feb 2014, 08:50 PM Reply Like
  • gary@3dnature.com
    , contributor
    Comment (1) | Send Message
     
    What are you talking about that IBM shares are plummeting? On what time frame? The response today looked relatively strong.
    28 Feb 2014, 01:06 AM Reply Like
  • twist54
    , contributor
    Comments (214) | Send Message
     
    Reading is not your 'point fort'?
    28 Feb 2014, 02:04 AM Reply Like
  • Camellia Capital Management
    , contributor
    Comments (220) | Send Message
     
    Where's the credit for Super Micro, who's gaining share every quarter?
    28 Feb 2014, 08:10 AM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1583) | Send Message
     
    As I mentioned above, super micro's servers fall under "white label" and "density optimized".
    28 Feb 2014, 10:08 AM Reply Like
  • Camellia Capital Management
    , contributor
    Comments (220) | Send Message
     
    Yeah, I realize that. Just want to see the name drop :)
    11 Mar 2014, 02:23 PM Reply Like
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