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September 16, 2014

Top 5 companies driving the server market 2014

Analyst house Gartner's Errol Rasit takes a walk through 5 US server players.

By

HP

In terms of market share, HP had significantly high revenue than any other vendor at $3.2bn in the second quarter of 2014, with 25.1% of the market, up 3.2% from 2013.

The hardware giant’s servers also power 200 of the TOP500 highest-performing supercomputers, revealed in 2013.

However, Errol Rasit, Gartner’s research director for Data Center Dynamics, told CBR the firm faces competition against lower-cost models from emerging vendors in the future.

"Probably HP’s biggest challenge is to look at how to compete with the emerging vendors from the far east, typically Chinese organisations like Huawei and Lenovo, but also manufacturers headquartered in Tawain like Quanta, who have hit the headlines recently because they are selling custom system designs to companies like Facebook for example," he told CBR in a briefing.

He added: "But the bigger challenge for HP is that as the larger more traditional customers, like the banks, finance industry and government start to consider purchasing systems at lower cost points and perhaps consider alternative suppliers, than that will threaten obviously their mainstream server business and profitability."

HP recently released its ProLiant Gen 9 series, an upgrade from its current Gen8 stock, which it claims assures faster deployment, lower operational costs, increased storage space and ease-of-use.

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The new servers are part of HP’s larger effort to remake its server lineup to address the modern data centre workloads, dovetailing with the firm’s low-energy Moonshot systems and Apollo servers for hyperscale environments.

IBM

IBM is the second largest vendor in terms of revenue due to sales of $2.97bn, according to the latest Worldwide Quarterly Server Tracker from research firm IDC.

But the company saw sales slide 10% from last year, which is likely to accelerate further in the front of its decision to sell its x86 server business to Lenovo, according to Gartner’s Rasit.

"The challenge that IBM faces is that part of the business that it turns into Lenovo, the X86 business, that is the technology for servers…it has the market share highest proportion of systems," he said.

"IBM is potentially making a big bet that it can provide credible alternatives to the X86 architecture, and also to prove a differentiated value proposition for specific workloads where the Power architecture can exhibit performance benefits over X86 architectures."

IBM recently introduced its latest M5 server portfolio, which is based on Intel’s latest Xeon E5-2600 v3 processor platform and includes up 1.5TB of memory.

"They’re focusing on trialling new strategies so there will be a period of transition whilst IBM ramps up the ecosystem around the Power architecture," added Rasit.

"And for that period of time, IBM does have to navigate this transition carefully. It has to make sure it’s still serving X86 customers through its relationship with Lenovo but also identifying the new opportunities in the power strategy."

Last month, IBM said it received approval for the sale of its x86 server business to Chinese computer giant Lenovo from the Committee on Foreign Investment in the United States (CFIUS).

Dell

Dell is the second largest vendor in terms of servers shipped, but is third in terms of revenue after IBM.

The computing giant’s server shipments dropped 11.4% to about 488,000 units, with sales hitting $2.2bn.

The privately-owned company has been as successful as HP has in providing customer engineering services, according to Rasit.

He said: "With the opportunity to perhaps do things outside of the radar of the public investors, it could potentially surprise us with some new offerings and some new approaches to technology.

"So right now, Dell is doing a good job maintaining its momentum and pushing more into value added channel partners. But certainly they are under the same threat that a potentially commoditising enterprise market who can affect profitability in the same way as it would HP."

Dell’s latest line of storage hardware encompasses tower, rack and blade running Intel’s Xeon Haswell processors, and targets new IT trends like BYOD, big data and cloud computing.

The firm is currently looking to address application performance after its own survey of 800 IT pros found all believe optimising applications is of critical importance to their businesses.

Oracle

In terms of market share, they come fourth after Dell with revenues of $737m, according to IDC, despite a 20.9% drop in the number of units shipped.

The company’s latest innovation is the SPARC M7 chip, announced last month at the Hot Chips conference in Cupertino, California.

The SPARC M7 comes with 32 CPU cores – 20 more compared to its predecessor, the M6 – and is built on a more advanced 20-nanometer process that allows for faster, smaller transistor, while another feature reduces message latency between servers.

Rasit said: "Oracle can do some things in a relatively unique way on its own SPARC architecture, so it can provide some differentiation over mainstream products from competing vendors. So, there is an opportunity for Oracle to increase its hardware and software sales."

Cisco

Cisco saw its server revenue rise 35% to $727m, as the networking giant increased server shipments by 4.9%, according to IDC.

The San Jose-based company, which holds 5.8% of worldwide server sales, recently announced plans to expand its Unified Computing System (UCS) from its core data centre workloads to the edge of the network.

The UCS M-Series modular servers and UCS C3160 storage machines are for cloud server providers and big companies looking to deploy lots of applications.

Cisco, which entered the server market in 2009, also unveiled the 6324 Fabric Interconnect or "UCS Mini" for mid-market companies, which uses cheaper connectivity and limits users to 15 servers.

Rasit said: "Most recently, it’s announced smaller configurations for remote and branch offices and smaller businesses, something where we see an opportunity for Cisco to increase its market share in.

"And also, it has a number of relationships with companies like NetApp in order to provide integrated systems….it’s actually a channel-integrated system, so rather than factory integration through the VCE, this is something where a channel partner, such as a value-added reseller or a system integrator, can play a role integrating from a reference architecture providing a Flexpod product "

He added: "So Cisco has taken the data centre market with a few differentiated strategies there and as we seen, it has been able to grow its market share as essentially a new entrant to the server market."

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