According to the IDC research group (www.idc.com), vendor revenue in the worldwide server market declined 4.6% year over year to $11.8 billion in the first quarter of 2017 (1Q17).
Overall server market growth continues to slow down with most hyperscale service providers waiting until the second half of the year for deployment of Intel’s new Skylake processors. High-end server sales continue to be a drag on overall market performance.
The market has also been negatively affected by DRAM pricing issues. Worldwide server shipments increased 1.4% year over year to 2.21 million units in 1Q17. One customer accounted for more than 10% of the servers shipped in 1Q17.
Volume server revenue declined by 3.4% to $9.5 billion, while midrange server revenue grew 16.5% to $1.3 billion. Demand for high-end systems experienced a year-over-year revenue decline of 29.0% to $1.0 billion. IDC expects continued long-term secular declines in high-end system revenue.
“The server market continues to struggle to find growth,” said Kuba Stolarski, research director, Computing Platforms at IDC. “As the market prepares for the switch to Intel’s Skylake this year, we may be witnessing a shift in how workloads are deployed in the future, and what architectural choices will be made around modularity, operating environments, software, and cloud services. As indicated by this quarter’s results, one large server customer appears to be betting on a major transition to cloud services, as it alone accounted for approximately a quarter of a million servers deployed in the first quarter.”