Leadership in the cutthroat, knockdown and bruising battle for server market share dominance is one of the IT world's most sought-after prize. Rule the data center and you're in the catbird seat when it comes to cracking new enterprise business up and down the IT stack.
And in this IT climate of tumultuous change, for OEMs and solution providers, the stakes are at an all-time high. Hewlett-Packard, IBM, Dell and Cisco are each in a period of transition, dealing with major internal disruption from splits, divestures, privatisation and network virtualisation.
What follows is a look at the top 10 takeaways from IDC's just-released third-quarter worldwide server revenue.
Worldwide server market revenue up 4.8 percent
OEM server sales are up 4.8 percent compared to the previous year, IDC reports, representing US$12.7 billion in the third quarter of 2014. That's the second consecutive quarter of year-over-year improvement in revenue.
Global server shipments were up 5.7 percent, IDC reports. It said that shipments, totaling 2.38 million in the third quarter, were driven by enterprise investments in hyperscale data-center servers to add capacity. Hyperscale deployments "continue to aggressively reshape the core server market," wrote IDC in its tracker report released last week.
What type of servers are driving the market?
IDC reported that not only are investments in hyperscale data centers driving the market, but so are blade and density-optimised servers.
"The server market continues to be deeply impacted by the shift to the third platform and the effect of mobile, cloud, social and big data analytic technologies," wrote Matt Eastwood, group vice president and general manager, Enterprise Platforms at IDC.
The term "third platform" is industry jargon that refers to a computing platform built to manage mobile devices, cloud services, social technologies and big data.
What type of IT trends are driving the server market?
IDC reports converged environments also are expanding the server market, albeit at a slower pace of 1.9 percent year-over-year, or US$2.3 billion. Converged environments include solutions that have either a server and data-storage solution in one device, or a server that contains networking equipment and software.
OEMs leading the converged infrastructure server space are HP with 43.2 revenue share, followed by Cisco with 25.6 percent share and IBM with 14.6 percent share. IDC noted that demand for IBM server brands -- x, Power and z -- declined sharply in the run-up to IBM's divestiture of its x86 server business to Lenovo in October.
Density-optimised servers take a hit
Servers, systems optimised to save space and cooling costs by packing multiple server nodes in a single chassis, declined in revenue by 4.4 percent year-over-year in the third quarter 2014. Shipments slipped 5.6 percent.
According to IDC, density-optimised servers represent 6.6 percent of all server revenue and 10.6 percent of all server shipments.
"Hyperscale deployments by cloud service providers continue to drive considerable growth in the server market," wrote Kuba Stolarski, research manager, Enterprise Servers at IDC. He said over the past year, the top four server customers, representing 20 percent of servers shipped worldwide, were cloud service providers.
"Public cloud demand for new servers will continue to outpace the general market over the next several years, as established enterprises and startups alike continue to ramp their usage of cloud services for infrastructure and application hosting," Stolarski said.
Server top-dog title goes to?
HP maintained its top position in the worldwide server market, owning 26.5 percent of the vendor revenue share for the third quarter. Bragging rights are tempered, however, by a 0.5 percent revenue decline.
IDC wrote HP was helped by improving demand for its x86-based ProLiant servers, however it was hurt by continued weakness for its Itanium-based Integrity server revenue.
"The server market is in a state of transition. To compete, vendors must be able to innovate on server designs and go-to-market strategies," wrote Jed Scaramella, research director, Enterprise Servers and Datacenter at IDC. "The software-defined datacenter is the goal for many IT organizations. Technologies, such as flash storage, virtualisation, and advanced management are important design enhancements that vendors need in their server offerings to enable their customers to transform the IT environments to the next era of IT."
Server runner-up, No. 2 spot goes to?
Despite the fact IBM sold off its x86 business to Lenovo in October, and that it saw a sharp year-over-year revenue decline of 17.8 percent, Big Blue managed to hold onto its No. 2 position with 18.2 percent server revenue market share.
IBM hasn't exited completely from the server business, still selling its Power and z server lines. However, IDC reports, demand for all three of its brands, including x86, has gone into a tailspin in the run-up to the sale of its US$2.1 billion blockbuster deal to sell its x86 server business to Lenovo.
Coming in third?
IDC reports that Dell maintained the third position with 17.8 percent server revenue share for the third quarter 2014. Analysts credit Dell's focus on data-center-transformation solutions that have enabled the company to leverage deeper partnerships with leading independent software vendors.
Dell's revenue increased 9.5 percent compared to the third quarter 2013, IDC reports.
The rest of the market
Cisco and Oracle ended the quarter with the No. 4 and No. 5 market positions with 6.2 percent and 4.1 percent OEM revenue share, respectively. Cisco's third-quarter 2014 revenue increased 31.2 percent compared to the same time last year. Oracle's revenue was up 3.4 percent compared to the year prior.
As for the rest of the server market, IDC reported that Chinese OEMs -- Inspur, Huawei, Lenovo and Sugon -- all grew revenue on a year-over-year basis by more than 35 percent for the third consecutive quarter.
"IDC has seen increasing market influence from greater China, hyperscale datacenters, ODMs and native Chinese OEMs, all of which grew sharply in the third quarter," IDC's Eastwood wrote.
Geographically speaking: Best Server Market?
Within what IDC classifies as regions, the United States, Asia/Pacific and Western Europe saw the steepest rise in server demand with revenue up 8.8 percent, 8.5 percent and 8.3 percent, respectively, according to IDC. In terms of specific countries that saw the largest uptick in revenue, China exhibited significant growth with year-over-year revenue up 20.9 percent to US$1.7 billion.
X86 still reigns supreme
Despite competition from IBM's Power server processor and ARM's processor technology (based on a reduced instruction set computing [RISC] architecture) used in servers, demand for x86 servers improved in the third quarter 2014. IDC reported servers based on x86 processor architecture experienced a worldwide revenue jump of 11.6 percent. IDC reported worldwide unit shipments increased 6.0 percent to 2.36 million servers.
HP led the x86 market with 29 percent revenue share based on 1.1 percent revenue growth over the third quarter 2013. Dell retained second place, securing 21.1 percent revenue share with 9.5 percent year-over-year revenue growth compared to the same time in 2013.