For hyperscale data center operators, the server is the business and there is no such thing as deferring purchases of new gear so long as there is growing customer demand for information.
And not surprisingly, in the fourth quarter of this year, sales of density-optimized servers, as the box counters at IDC are now calling the various skinless and minimalist server designs, boomed in the quarter and they dragged up Linux-based server sales a bit too.
IDC reckons factory revenues for servers actually declined by 7.2 per cent, to $14.2bn, in the fourth quarter, and the shift to these density-optimized machines was part of the reason why revenues declined even though shipments across all types of servers rose by 2 per cent to 2.2 million units in Q4.
The problem is that hyperscale data center operators that like minimalist server designs also like low prices. So even as shipments of these specialized boxes rose by a very impressive 51.5 per cent in Q4, to 132,876 units, revenues only grew by 33.8 per cent to $458m. If you do the math, that works out to an average of $3,446 per server for the density-optimized machines, and if you subtract these out of the general pool of kit sold, then all of the other machines average out to $6,651 per box across those 2.07 million boxes.
Jed Scaramella, research manager of enterprise servers at IDC, told El Reg that these density-optimized machines accounted for 6 per cent of worldwide server shipments and are projected to grow to about 10 per cent of total shipments through the end of 2013. That's about four times the growth of the server industry overall - and, by the way, these minimalist machines are taking away some market share from blade servers in the HPC area.
That said, blade server sales were up in Q4 and posted their highest sales ever and, equally importantly, their highest share of total revenues ever. Revenues grew 8.3 per cent in the quarter for blades, to $2.3bn, and shipments rose by 1.7 per cent.
"Blades were up nicely, and it is an area with a lot of pull-through business for software, storage, networking, and so on," said Scaramella.
IDC says that x86 processors were installed on 89.6 per cent of the blades sold in Q4 and that blades now make up nearly a quarter of all x86 server shipments. Reckoned by revenues, Hewlett-Packard has a very commanding 47.4 per cent share of blade servers, followed by IBM's 21.5 per cent, Cisco Systems with 11 per cent, and Dell with 8.7 per cent.
While x86 processors are installed in the vast majority of machines shipping in the fourth quarter (as has been the case for the past several years), revenues from x86 iron actually dropped in the quarter by 1.7 percent to $9.1bn, mostly because the market is awaiting Intel's formal launch of the "Sandy Bridge-EP" Xeon E5 processors for two-socket servers. For the full year, x86 iron accounted for $34.4bn in revenues (up 7.7 percent) and 8 million units (up 3.7 percent).
IDC's dicing and slicing of the server racket differed from rival Gartner, whose Q4 numbers we already covered. IDC breaks the market down by server price band and tries to figure out what the primary operating system is for each server, too.
High-end server sales took a dive in the fourth quarter as IBM's zEnterprise mainframe cycle waned while HP, Oracle, and Fujitsu took it on the chin in the Unix market. Sales of boxes that cost $250,000 or more fell by 18.4 per cent to $3.7bn in the quarter. Volume machines, which by IDC's definition cost $25,000 or less, had a 2 per cent decline in Q4, to $8.8bn. Midrange machines – those that cost between $25,000 and $250,000 – took a 4.6 per cent hit to $1.8bn.
By operating system, Linux-based servers were the only category that saw a revenue increase, rising 2.2 per cent to $2.6bn in the quarter. Linux server sales were bolstered by those density-optimized machines and now account for 18.4 per cent of all shipments. Windows-based servers continue to dominate, but shrunk a bit in Q4, down 1.5 per cent to $6.5bn. Unix machines took a 10.7 per cent dive in Q4, to $3.4bn, as IBM grew its Unix revenues 2.5 percent and grabbed 7.9 points of market share. Its rivals all had declines in this space.
If you do the math on what remains, then the others – dominated by IBM's System z mainframes but including other proprietary iron, too – accounted for $1.7bn, down 27.5 per cent compared to the same period last year.
Add it all up, and IBM shrank a little faster than the server market overall, at 7.6 per cent, but managed to be top dog by a considerable margin, with $5.18bn in sales. HP bled off market share to IBM in Unix and to Dell in x86 iron, and its sales dropped 16.2 per cent to $3.75bn in the quarter.
Dell's revenues – which come exclusively through x86 iron – rose by 9.7 per cent to $2.1bn and gave it a third place ranking. Oracle's revenues fell 11.5 per cent in Q4 to $735m and Fujitsu fell by 10.5 per cent to $484m. Other vendors accounted for just under $2bn and rose thanks to share gains by Cisco, Lenovo, and a few others.
For the full year, IDC believes that server revenues came to $52.3bn, up 5.8 per cent, and shipments rose by 4.2 per cent to 8.3 million machines. That shipment level is back to levels set before the Great Recession, but revenues are not quite there yet. And with price pressure on mainframe and Unix boxes and the popularity of minimalist server designs, maybe they will never reach that level again. ®