The end of 2012 painted a dreary picture for the server industry. Factors such as increased competition from new companies, strong competition from start-ups, and growth in the DIY sector all made a dent in shipments and revenues.
3Q12 ended with a 3.6% increase in server shipments, although revenues fell by 2.8% to US$12.6 billion. In addition to the factors listed above, many vendors were in the middle of product transitions. Also, at the time, several new processors were about to be introduced, which may have influenced some OS customers to hold on ordering.
Healthy completion among leaders
The x86 server platform, which has always been successful, is bringing more positive news to the industry. Revenues rose 4.3% to US$9.37 billion. HP continues to lead the way through their ProLiant, Scalable Systems and Bladesystem product lines. However, we should note there is also no competition. Fellow big box manufacturer Dell continued to show growth in its x86 business through the PowerEdge line. IBM and Fujitsu still have some work to do, as their numbers are slipping comparatively. Cisco has made major strides in their gunning for the #4 spot on the list. It seems that Cisco has targeted IBM’s server business and if they can maintain this growth, in two years, Cisco could become a major player in the x86 sector.
Wider market view
In the horizontal market, whitebox leaders have moved past the rough year in 2012. By staying with their core business in servers and storage, Super Micro played the odds on x86 processors and posted a record high sales number at the end of 2012. Revenues increased to US$219 million despite a slowing server market. The server industry is rich in competition, so companies are constantly designing new servers and looking to expand their global presence and this keeps the server market healthy and innovating.
Sales across the ocean in Europe also declined last year by 9% to just short of US$3 billion. This decline included x86 sales. According to Adrian O’Connell from Gartner, predictions for 4Q12 are likely to come in similar to the rest of last year.
Help from SSDs?
SSDs may provide an additional boost to the server and storage market. Swapna Yasaarapu, director, SSD product marketing at STEC, has this to say, “Data centers are facing an information deluge. There’s a lot of data being created very rapidly and that has to be accessed by a lot of users at very fast speeds.”
Spinning-disc media will most likely always be the cheaper of the two disc media options. Meanwhile, cache applications will remain high on the list of demands in this market. The resulting situation leaves plenty of opportunities for SSDs to work their way in and offer a boost for both the SSD and server markets.