Rack servers break the bank but modular server units tank in 3Q14 in EMEA, says IDC
The EMEA non-x86 market continued its steady decline in vendor revenue (-25.1% YoY) and shipments (-24.2% YoY) for 3Q14 as legacy systems refreshes tend to show high levels of seasonality, and new workloads are primarily added on the x86 side.
The x86 market in comparison gained almost 7 points in revenue share versus the previous quarter and now accounts for 87.1% of the overall EMEA revenue and all of the growth for 3Q14. x86 machines exhibited a YoY gain in revenue and units shipped of 12.7% and 2.4%, respectively, where the majority of this growth can be attributed to higher levels of adoption seen by rack optimized systems that contributed 58.9% of the vendor revenue in EMEA thanks to YoY growth of $187 million (+13.8%) in vendor revenue and 15,600 (+5.7%) units. Blades and density optimized systems played a lesser role in the growth of the EMEA market reporting a revenue growth of 7.4% and 5.7% YoY compared to the strong double digit boosts in the previous quarter. Tower servers are the only segment to suffer negative revenue growth (-11.1%) in the EMEA x86 market in 3Q14, despite their positive growth in terms of units shipped.
"The third quarter is usually the slowest in EMEA as it entails summer months," said Giorgio Nebuloni, research manager with IDC EMEA. "It is therefore a positive sign to see sustained spending growth continue across several key geographies including the U.K., Russia, the Netherlands, and Germany. We believe this is a combination of next generation, 3rd Platform workloads that continue to boost unit volumes and refreshes driven by consolidation within on-premises enterprise environments. IDC remains on the lookout for signs of a slowdown in 4Q14, as particularly France and Italy appear to have tapered off somewhat in the period."
Western Europe Highlights
Western Europe (WE) has continued to build on the positive growth seen in the previous quarter and has reported YoY revenue growth of 8.3% or $176 million and YoY unit shipment growth of 5.6% or 21,250 units. Gaining 1.7 and 2.5 percentage points of revenue and units shipped market share over CEMA respectively, the WE market reported $2.3 billion in vendor revenue and 402,700 units shipped. A portion of this increase has come outside of established distribution channels as a few major vendors completed larger deals with service providers, search engine firms and HPC in the public sector.
"This is an interesting trend that has seen increased traction as vendors compete against larger original design manufacturers that have shown no suggestion of breaking their continued back to back double digit growth," said Eckhardt Fischer, research analyst, IDC EMEA Enterprise Server Group.
The decrease seen by the non-x86 segment was highlighted in WE, as the region lost 2.1 percentage points revenue share to Central Europe, the Middle East, and Africa (CEMA) in 3Q14 and reported a decrease in vendor revenue and unit shipments of 27.2% and 26.9% respectively. x86 systems therefore contributed the lion's share to growth seen in WE, increasing YoY by $285,11 million (+16.6%) and 22,600 (+6%) in revenue and units respectively for 3Q14.
The x86 market also saw Linux report the largest YoY vendor revenue increase of 21.5%, while Windows reported a 13.9% increase. This YoY increase by Linux can be attributed to large growth seen in the United Kingdom and Finland, and resulted in a YoY percentage point increase in revenue and unit share of 1.5 and 2.1 respectively - a growth that was directly felt by Windows.
"This quarter was characterized by a weak performance of the Western European blade and density optimized server market, while a surge in rack servers boosted overall growth," said Andreas Olah, research analyst, IDC EMEA Enterprise Server Group. "While increasing volumes of ODM shipments were driven by new cloud service provider datacenters in Germany and Finland, overall server revenue grew more significantly than units in WE as the shift towards higher-end models with mission-critical and in-memory processing capabilities continues. Substantial demand is coming from new workloads in the Big Data analytics space, which is also driven by advances in network virtualization and the Internet of Things."
"Central and Eastern Europe, the Middle East, and Africa (CEMA) server revenue continued on the downward trajectory, declining by 1.6% YoY to $705.4 million in the third quarter of 2014," said Jiri Helebrand, research manager, IDC CEMA. "While non-x86 servers declined by 17.9% year-over-year in revenue, x86 servers recorded revenue growth of 1.5% despite unit shipments shrinking by 6.8%. A focus on richer configurations as well as increased interest in rack and blade servers were the main contributors to revenue growth.
"The Central and Eastern Europe (CEE) subregion was flat year-over-year, with revenue of $363.5 million. Even though the geopolitical risk in the region remains, several HPC deals in Russia, the Czech Republic, and Hungary helped to keep the CEE server market afloat. The Middle East and Africa (MEA) subregion declined by 3.4% YoY in revenues to $342.0 million, although it comes on the back of a strong quarter in the Middle East one year ago. The African region recorded the strongest annual growth in CEMA, mainly driven by IT investments in Nigeria and Kenya."
- Non-x86 revenues have continued their steady decline (-25.1% YoY). This was driven by CISC servers (-46.9%YoY), though all other non-x86 servers have persisted in their slow stabilization.
- Windows continues to grow its vendor revenue share and is up 1.6 percentage points. Linux has rallied this quarter, however, under the influence of some larger deals, to report a 2.8 percentage point YoY increase - the largest OS gain this quarter.
- Maintaining the top spot, volume servers reported $2.42 billion to the EMEA market and gained 4.8 percentage points on the corresponding quarter in 2013. 3Q14 has not been kind to the high-end enterprise servers as they reported a 30.7% YoY decrease in vendor revenue.
- Rack servers were the biggest influence in EMEA for 3Q14, reporting 10.5% YoY growth in vendor revenue and 5.7% unit growth to report $1.73 billion in vendor revenue and 292,898 units shipped into the EMEA market for 3Q2014.
IDC Central Europe GmbH
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