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Tough times in the server market, even though more iron moved in '13

Sadly it was teeny-to-medium, not lovely Big Iron

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The market dynamics were all wrong for folk building and supplying server boxes in 2013 - in the year that shipments reached a record nine million milestone, factory revenues tumbled.

IDC is the second beancountery in as many days to publish less than flattering stats, with unit sales rising 3.2 per cent on calendar '12 but the value of the market dropping 4.4 per cent to $49.7bn.

As El Chan pointed out on a couple of occasions last year, nobody in vendor or channel land looks like getting mega rich in the current environment, as demand for heavy duty big iron systems ebbs.

And this is exactly what happened again in Q4 according to IDC - volume systems bounced eight per cent to $10.2bn but mid-range and high-end servers dropped 19.6 and 28.5 per cent to $1.2bn and $2.8bn respectively.

"The market continues to be impacted by enterprise focus on 2nd Platform workload consolidation, which at this point in time is only partially offset by 3rd Platform hyper scale server deployments," said Matt Eastwood, group veep and GM for Enterprise Platforms.

Demand for x86 servers was up with revenues growing 7.8 per cent to $10.7bn and shipments rising 8.6 per cent to over 2.5 million servers. HP was the only of the top three to report growth as Dell server revenues declined by single digits and IBM by double digits.

Cloud infrastructure deployments continued to beef up Linux server demand, as hardware revenues jumped 14.4 per cent year-on-year in Q4 to $4.1bn, or 28.5 per cent of all server revenues.

In contrast Microsoft Windows server hardware revenues came in flat, or up 0.1 per cent, totalling 6.5bn or 45.7 per cent of the quarter's overall factory revenue.

Unix server revenues declined 20.2 per cent to $1.9bn, accounting for 13.6 per cent of the total market.

"The Unix market continued its secular decline, and mainframe had large declines on a difficult compare to a year ago, amid explosive growth in hyper scale and ODM direct sales," said IDC.

"The Unix server market continues to undergo consolidation and price compression, and as mainframes find their niche, IDC believes that the server market is very close to a tipping point when hyper scale growth will be large enough to overshadow declines in the high-end.

"The additional growth in ODM Direct sales, spurred most recently by a native data centre expansion by some of the largest device providers, will help the server market reach that tipping point faster," it added. ®

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