Market Insight

Richer server configurations in Q1 2018 led to a 32 percent year-over-year rise in data center server revenue

June 08, 2018

This product is included in:

Want to learn more?
Have an expert contact you.

Richer server configurations, supported by new compute and memory-intensive workloads, led to a 32 percent year-over-year increase in data center server revenue, which hit $17.9 billion in the first quarter of 2018. After three consecutive quarters of growth, average memory prices started to stabilize in the first quarter, but compute and data-intensive workloads kept server prices 20 percent higher than the previous year’s first quarter.

Server shipments grew ahead of seasonality in the first quarter, growing 10 percent over the first quarter of 2017. It was also the first time density-optimized blade servers out-shipped shared-resource blade servers. In fact, nearly every vendor offering density-optimized blades reported soaring demand from cloud service providers (CSPs).

Demand for open-compute and white-box rack servers also continued to drive a form-factor transition in the data center server market. “As in the past, server vendors offered new products targeted at telcos, with Open Compute Project servers taking center stage,” said Cliff Grossner, Ph.D., senior research director, IHS Markit.

The overall dynamics affecting the market include a growing need for additional compute power, as more smartphone users connect in developing countries, and as 54.5 billion more devices are introduced in the following vertical markets: automotive and transportation, commercial and industrial electronics, communications, computers, consumer and medical. “The data center server equipment market will continue to grow through 2022, as worldwide demand for compute outstrips growth in central processing unit compute capacity and as efficiency gains from server multi-tenancy begin to slow,” said Vladimir Galabov, senior analyst, IHS Markit.

“Machine learning, artificial intelligence and other new software technologies will continue to drive the development of new server architectures, bolstering the market for specialized processors capable of high degrees of parallelism,” Galabov said. “However, as the limits of silicon are being reached, we can expect the intensive search for alternative materials to open new markets.”

Additional data center equipment market highlights

  • The “White Box OEM” group — which includes vendors like QCT, Wiwynn and Inventec that produce rack server hardware with OS software sold separately — led the data-center server market in unit shipment volume in the first quarter, with 27 percent share. This group also ranked number-one in data center server revenue rankings, comprising 21 percent of the market in the first quarter, followed by Dell EMC at 20 percent and HPE at 18 percent.
  • Open compute year-over-year revenue rose 68 percent, hitting $1.3 billion in the first quarter; white-box rack year-over-year revenue increased 43 percent, reaching $2.7 billion; density-optimized blade revenue surged 66 percent, hitting $1.4 billion.
  • CSPs are projected to receive 43 percent of data center server units shipped in 2018, while telcos will receive 15 percent and enterprises will receive 42 percent.

Data Center Compute Intelligence Service

The quarterly IHS Markit “Data Center Compute Intelligence Service” provides analysis and trends for data center servers, including form factors, server profiles, market segments and servers by CPU type and co-processors. The report also includes information about Ethernet network adapters, including analysis by adapter speed, CPU offload, form factors, use cases and market segments. Other information includes analysis and trends of multi-tenant server software by type (e.g., server virtualization and container software), market segments and server attach rates. Vendors tracked in this report include Dell, HPE, IBM, Inspur Broadcom, Cavium, VMware, RedHat, Docker and White Box OEM (e.g., QCT and WiWynn).

Research by Market
Enterprise & IT
Share facebook Twitter Google Plus Linked In Add This Contact Us