In an era where cloud computing is the new normal, (storm-driven outages aside), it's no surprise that sales of traditional server hardware are declining. But it's still slightly shocking to see how tough it is to turn a dollar in the server market these days.
The table below shows Gartner's data on the market share for the five biggest server vendors in the first quarter of calendar 2016. It's good news for two of the Chinese manufacturers, Huawei and Inspur, who have seen their market share increase. The more traditional players — HP Enterprise, Dell and Lenovo — have all declined, though their absolute market share remains much larger.
|Company||1Q16 Shipments||1Q16 Market Share (%)||1Q15 Shipments||1Q15 Market Share (%)||1Q16-1Q15 Growth (%)|
The most notable trend, however, is the growth for "Others", up from 45.3 per cent of the market in 2015 to 47.4 per cent. If that trend continues, we'll soon see more than half the market going to unnamed brands.
What's driving that shift? Gigantic cloud data centres for companies like Google, Microsoft and Amazon Web Services. Those use custom server hardware (and custom drives). Buying in bulk means driving a hard bargain on prices. Virtualisation has had a long-term effect on the sale of server hardware, though our appetite for virtual workloads has meant that servers haven't disappeared completely.
"The real driver of global growth continues to be the hyperscale data centre segment," Gartner analyst Jeffrey Hewitt said in a statement announcing the figures. "The enterprise and small or midsize business (SMB) segments remain relatively flat as end users in these segments accommodated their increased application requirements through virtualisation and considered cloud alternatives."
For the server business, dominance isn't an absolute necessity, but profitability is. That's also a challenge. Global revenues from servers were down 2.3% in the first quarter compared to the previous year.
|Company||1Q16 Revenue||1Q16 Market Share (%)||1Q15 Revenue||1Q15 Market Share (%)||1Q16-1Q15 Growth (%)|
What's interesting is that the dominance of Others in terms of volume doesn't translate into dominance in revenue. The total Others category accounts for half of sales volume, but only a third of sales revenue. Conversely, HP Enterprise accounts for 20% of sales by volume, but 25% of sales by revenue.
For enterprise users, lower prices when they do need hardware and the option to use cloud when that isn't a requirement sounds like a win/win. But make sure you review what you're paying, because if you're going with a "big brand", the price might be on the high side.
Angus Kidman is editor-in-chief for comparison site finder.com.au , a former editor for Lifehacker Australia and a man who remembers when client/server was actually a thing. Follow him on Twitter @gusworldau.