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Worldwide server market revenues dip 3.7 pc in Q3

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Soma Tah
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FRAMINGHAM, USA: According to the International Data Corporation (IDC), factory revenue in the worldwide server market decreased 3.7 percent YoY to $12.1 billion in the third quarter of 2013 (3Q13). This was the third consecutive quarter of YoY revenue decline.After increasing modestly in 2Q13, server unit shipments were flat year over year in 3Q13 with 2.3 million units shipped worldwide.

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On a YoY basis, volume systems experienced 3.5 percent revenue growth. At the same time, demand for midrange and high-end systems experienced YoY revenue declines of 17.8 percent and 22.5 percent respectively in 3Q13. The midrange and high-end segments were impacted by difficult YoY compares and continued weakness in Unix demand while volume demand was helped by solid x86 server demand.

"Worldwide server revenue declined in all major geographic regions including Americas, EMEA, and Asia/Pacific in the third quarter. The market was impacted by a steady transition from second platform to third platform workload demand coupled with particularly weak sales of Unix servers, which served to further dampen the market," said Matt Eastwood, group VP and GM, Enterprise Platforms at IDC.

HP regained the first position in the worldwide server market with 28.1 percent factory revenue share in 3Q13. IBM held the second position in the market with 23.4 percent factory revenue share.

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Dell maintained third place with 16.2 percent factory revenue market share in 3Q13. Cisco and Oracle ended the quarter in a statistical tie for the number 4 market position with 5.0 percent and 4.1 percent factory revenue share respectively.

Linux server demand continued to be positively impacted by cloud infrastructure deployments, as hardware revenue increased at 5.6 percent YoY to $3.4 billion in 3Q13. Linux servers now represent 28.0 percent of all server revenue, up 2.5 points when compared with the third quarter of 2012.

Unix servers experienced a revenue decline of 31.3 percent YoY to $1.3 billion representing 11.1 percent of quarterly server revenue for the quarter. This was the lowest quarterly Unix server revenue ever reported by IDC.

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ODM Direct server demand grew 45.2 percent YoY in 3Q13 to $783 million as unit shipments increased 30.7 percent to 325,685 servers. ODM Direct servers now represent 6.5 percent of all server revenue and 14.4 percent of all server shipments. 79.6 percent of all ODM Direct server revenue was generated in the U.S. in the quarter primarily through sales to Google, Amazon, Facebook and Rackspace.

Demand for x86 servers continued to improve in 3Q13, with revenues growing 2.8 percent in the quarter to $9.5 billion worldwide with unit shipment growth flat at 2.2 million servers.

Blade servers, which are highly leveraged in enterprise's virtualized environments, grew 7.7 percent YoY to $2.3 billion. Blades now account for 18.7 percent of total server revenue.

Density Optimized servers, utilized by large heterogeneous datacenters, also experienced solid demand in 3Q13. Revenue grew 13.1 percent YoY in 3Q13 to $853 million as unit shipments increased 0.6 percent to just over 260,000 servers. Density Optimized servers now represent 7.1 percent of all server revenue and 11.9 percent of all server shipments.

"Blades continue to gain adoption with customers, as they are the foundation for many vendors' integrated systems," said Jed Scaramella, IDC research director, Servers. "Integrated systems combine server, storage, and networking to enable IT organizations to simplify their IT environments and accelerate time to deploy new IT services. The journey to convergence and integrated systems begins with a bladed ecosystem."