Global server shipments reached an industry record-breaking 3.3 million units in the first quarter of 2020, marking a 30 per cent year-on-year growth, Omdia analysts estimated this week.
That's not too surprising and it's not just due to the coronavirus crisis. The first quarter of 2020 followed a strong final quarter of 2019, in which shipments grew 27 per cent year-on-year and sequentially, we're told, as the data-center market expanded. Last year, 11.9 million servers shipped, up four per cent on 2018, it is estimated, raking in $78bn in sales. That revenue total is actually down six per cent on 2018 due to component prices, particularly memory, falling, and the lower costs passed onto customers as savings.
As you'd expect, the first-quarter surge this year largely came at the end of the three-month period when millions around the world stayed inside and worked from home to curb the coronavirus spread. All those video conference calls, cloud-based productivity and collaboration suite subscriptions, and business applications needed machines to run on.
With the manufacturing sector in China slowed by the virus outbreak in January and February, many server vendors reported constrained supply chains, the analysts noted. Once that cleared, however, shipments took off. The second quarter is also expected to produce huge numbers, and has pushed Omida to bump up its full-year server sales estimates by 500,000 to more than 12.7 million units.
And who was buying? Cloud giants mainly from white-box makers, such as Foxconn and Quanta; and smaller cloud platforms, businesses, and telcos from traditional suppliers, such as Dell and HPE.
Multiple data points from vendors and end-users indicate that during the first quarter of 2020 cloud service providers continued to expand their server installed base to accommodate a ramp-up of consumer and enterprise demand, said Omida's Vlad Galabov, principal analyst for data center IT.
Enterprises increased their investment in servers as these organizations prepare employees and business processes for remote working. Meanwhile, telecommunications network providers ramped up server deployments to cope with increased demand on wireless and wired networks. As a result, the server market attained a quarter of year-over-year growth exceeding 30 percent.
Having said that, while it's been a boom time for server makers, any number of businesses and organizations are expected to cut their spending to weather this year's coronavirus's economic storm, which will bring shipments of traditional servers into the enterprise back down to Earth. There may still be strong demand for traditional servers from second-tier clouds and telcos, though.
Meanwhile, tier-one cloud platforms are expected to continue buying up white boxes to support their swelling userbases.
We now have multiple indicators that the start to 2020 and likely the entire first half of the year will see the server market grow double digits over 2019, Galabov said.
However, its important to avoid underestimating how much the server market could be impacted by the looming global recession. Many enterprises and governments are likely to postpone investing in new servers in the second half of 2020. Additionally, despite vendors and distributors successfully managing the supply chain challenges in the first quarter of the year, Omdia continues to receive reports of strain and shortages in components globally.
Dell and HPE will have strong demand from enterprises setting up working-from-home conditions and doing final server deployments before lockdown...
Speaking to The Register on Wednesday, Galabov added: "I expect that in the first quarter, Dell and HPE will have strong demand from enterprises setting up working-from-home conditions and doing final server deployments before lockdown, and from tier-two cloud service providers and telecommunication network providers responding to growing demand for their services.
"As the year progresses, demand from enterprises will definitely soften, and it could offset or more-than-offset the goodness from the first quarter. I dont think telco and tier-two cloud service provider demand will be enough to offset enterprise weakness for Dell and HPE."
Furthermore, as organizations adopt cloud-hosted services during the pandemic, this could be a catalyst for customers shifting more workloads off premises, reducing data-center server sales.
Galabov said much of the long-term growth in the market will continue to be driven by the hyperscalers that prefer large volumes of white-box hardware. This means the big brand names will continue to fight over the tier-two cloud platforms, businesses, and network providers. By 2024, the analyst firm estimates, the market will reach a point where only one in every four servers will be owned and operated on-premises by an enterprise customer.
"HPE, Dell, and IBM have minimal shipments to hyperscale cloud service providers today," Galbov told us. "From that perspective they should not see much of the demand increase from these clients, however, they should benefit from strong demand from tier-two cloud-service providers, and telcos. This strong demand could partially offset weaker demand from enterprises."
For the final quarter of 2019, according to the analysts, IBM bagged a 8.3 per cent share of server industry revenues, from a 26 per cent year-on-year revenue increase due to z15 mainframe sales, and Huawei took a 6.5 per cent share after growing revenues 35 per cent. Dell-EMC took 17.4 per cent, and HPE 15.3 per cent, after suffering falling revenues.
The white-box makers, which took 18.7 per cent of the market, and a six per cent dip in sales, "established themselves as preferred server vendors to cloud service providers and have the most to gain from the cloud data center expansion in 2020," the analysts added.
Sponsored: Webcast: Build the next generation of your business in the public cloud
- Uncover and overcome cloud threat hunting obstacles - TechTarget - May 26th, 2020
- This extraordinary motherboard is being used by server CPU scavengers - TechRadar India - May 26th, 2020
- VMware reduces hardware footprint of its shiny new K8s-on-vSphere toys - The Register - May 26th, 2020
- How Zoom plans to better secure meetings with end-to-end encryption - TechRepublic - May 26th, 2020
- VMware, Dell level up their combined on-prem cloud with much more computing grunt - The Register - May 26th, 2020
- Accelerator Card Market Will Witness Substantial Growth in the Upcoming years by 2027 - WaterCloud News - May 26th, 2020
- Uber India deploys Canon information management solution- Therefore for operational workflow - CRN.in - May 26th, 2020
- Potential Impact of COVID-19 on Research Report prospects the Server Backup Software Market - Cole of Duty - May 26th, 2020
- Do You Know Where Your Servers Come From? Heres Why Securing The Supply Chain Matters - Forbes - May 26th, 2020
- Live analytics without vendor lock-in? It's more likely than you think, says Redis Labs - The Register - May 26th, 2020
- Latest Forecast on Government Cloud Market Emerging Industries, Growth, Remarkable Developments and Key Players| Global Future Prospects 2025 - 3rd... - May 26th, 2020
- Cloud Accounting Software Market Research Report Comprising Development Trends 2020, Key Manufacturers and Competitive Landscape to 2025 - Cole of... - May 26th, 2020
- Gartner: How and why cloud providers need to support their customers through Covid-19 - Cloud Tech - May 22nd, 2020
- The Connection Between Cloud Service Providers and Cyber Resilience - Security Intelligence - May 22nd, 2020
- Google And Dell Pave The Way For File Data In The Cloud - The Next Platform - May 22nd, 2020
- Veeam teams up with Kasten for containerised app backup Blocks and Files - Blocks and Files - May 22nd, 2020
- Hybrid cloud: The key to surviving and thriving during the pandemic - WTOP - May 22nd, 2020
- Global Bare Metal Cloud Market : Industry Analysis and Forecast... - Azizsalon News - May 22nd, 2020
- Exabeam sees more than half of new and add-on recurring revenue from cloud offering - Help Net Security - May 22nd, 2020
- OnShip Brings its Parcel & Freight Shipping Transportation Management Platform to the Cloud with Cameyo - Supply and Demand Chain Executive - May 22nd, 2020
- 'What is Dropbox?': How to use the cloud-based file-storage service for collaboration - Business Insider - Business Insider - May 22nd, 2020
- Couchbase Announces $105 Million Equity Investment Led by GPI Capital to Fuel Its Next Phase of Growth and Cloud Innovation - GlobeNewswire - May 22nd, 2020
- The Register calls for aid, and Microsoft's Rohan Kumar will answer... our questions about SQL Edge and Azure Synapse - The Register - May 22nd, 2020
- What are the different types of cloud load balancing? - TechTarget - May 22nd, 2020
- How data centers will become automated and self-reliant - TechHQ - May 22nd, 2020
- Masayoshi Son says AWS and Microsoft will buy more chipsets from the SoftBank Vision Fund-backed Arm, and not - Business Insider India - May 22nd, 2020
- Chinese IPOs hang in the balance as Senate and Nasdaq change rules - Data Economy - May 22nd, 2020
- Portworx upbeat on container storage revenues Blocks and Files - Blocks and Files - May 22nd, 2020
- New study Global Managed Servers Market 2019 | Growth Opportunities, Investment Feasibility, Market Share And Forecast 2025 - Cole of Duty - May 22nd, 2020
- New Study Finds that IT Pros Are Worried About Corporate Data Security - Database Trends and Applications - May 19th, 2020
- Get your head in the cloud: why cloud is crucial for sustainable business - New Zealand News Centre - Microsoft - May 19th, 2020
- The Global Public Cloud Services Market is expected to grow by $ 221.84 billion during 2020-2024 progressing at a CAGR of 19% during the forecast... - May 19th, 2020
- Traditional or Cloud Antivirus Solutions Which is Best? - PC Tech Magazine - May 19th, 2020
- Moving beyond Covid-19: what does the future of work look like? - ETCIO.com - May 19th, 2020
- AWS unleashes custom Arm processor the Graviton2 in new EC2 M6g instance type - The Register - May 14th, 2020
- Pandemic Shows The Value Of The Public Cloud - The Next Platform - May 14th, 2020
- Jigsaw24 Expands Via24 Cloud Services With Deployment of EditShares EFSv - Broadcasting & Cable - May 14th, 2020
- The age of the ethical cloud is green and for everyone Intelligent CIO Europe - Intelligent CIO Africa - May 14th, 2020
- The Future of Artificial Intelligence: Edge Intelligence - Analytics Insight - May 14th, 2020
- How cloud is accelerating the growth of digital payments - TechHQ - May 14th, 2020
- Live Webinar Preview: Commands & Custom Scripting for Remote Application Installs - Security Boulevard - May 14th, 2020
- Private Cloud Server Market Growth by Top Companies, Trends by Types and Application, Forecast to 2026 - Cole of Duty - May 14th, 2020
- Swarm Theory: Lessons from nature in the advancement of robotics - Techerati - May 14th, 2020
- What are the Differences Between IaaS, PaaS, and SaaS? - stopthefud - May 14th, 2020
- Zoom Settles with NY AG over Privacy and Security Concerns - Security Magazine - May 14th, 2020
- Codestone helps shipping agent to cloud-based infrastructure - Codestone - May 14th, 2020
- Global Cloud Infrastructure Testing Market Research Report 2020 By Size, Share, Trends and Analysis up to 2025. - Cole of Duty - May 14th, 2020
- Digital Harmonic to Bring its Powerful AI-Driven Image and Video Enhancing Solution to the Federal Market - Business Wire - May 14th, 2020
- Sorry if this seems latency obvious, but... you can always scale out your storage with end-to-end NVMe - The Register - May 14th, 2020
- The role of the data centre in the future of Data Management - Data Economy - May 14th, 2020
- We'd love to come up with a Harbor container ship pun but we're too corona-frazzled. Version 2.0 is out - The Register - May 14th, 2020
- Edge Intelligence: The Next Wave of AI - EE Times India - May 14th, 2020
- Patch by Friday or compromised by Monday: Salt exploit exposes Infrastructure-as-Code tools threat - SC Magazine UK - May 6th, 2020
- Serverless Exists In The Cloud and Both Need Servers - Computer Business Review - May 6th, 2020
- Analysis on Impact of COVID-19- Rugged Servers Market 2020-2024 | Increased Adoption of Cloud Applications to Boost Growth | Technavio - Business Wire - May 6th, 2020
- Privitar Announces New Native Integration With Google Cloud Platform - Business Wire - May 6th, 2020
- Industrial 5G and the Mobile Edge - ARC Viewpoints - May 6th, 2020
- Neutrino Energy Will Power The Future's Internet Consumption - Forbes India - May 6th, 2020
- Norton 360 Deluxe review: Comprehensive security solution with built-in VPN - Business Standard - May 6th, 2020
- Microsoft Announces the General Availability of Windows Server Containers, and More for AKS - InfoQ.com - May 6th, 2020
- Protecting the Cloud: Securing access to public cloud accounts - Naked Security - May 6th, 2020
- Cloud Act is not a sovereign aggressive overreach by the US - News24 - May 6th, 2020
- How to Set Up pCloud Drive in 2020 - Cloudwards - May 6th, 2020
- What public clouds are coronavirus-themed threats hiding in? - ARNnet - May 6th, 2020
- In the cloud, who can hear your developers scream? - The Register - May 4th, 2020
- Unlock The Full Value Of SAP Hana In The Cloud With IBM Power - E3zine.com - May 4th, 2020
- Critical SaltStack vulnerability affects thousands of datacentres - ComputerWeekly.com - May 4th, 2020
- Hot On The Heels Of Mellanox, Nvidia Snaps Up Cumulus Networks - The Next Platform - May 4th, 2020
- AWS Cloud Formation Market Countries Analysis Report 2020 by Industry Size, Share, Growth Rate and Revenue Aminet Market Reports - amitnetserver - May 4th, 2020
- Review hybrid cloud offerings that bring the cloud on premises - TechTarget - May 4th, 2020
- Gmail and Outlook sitting in a tree, not t-a-l-k-i-n-g to me or thee - The Register - May 4th, 2020
- The attacker and the data centre - ITProPortal - May 4th, 2020
- Three things in life are certain: Death, taxes, and cloud-based IoT gear bricked by vendors. Looking at you, Belkin - The Register - April 29th, 2020
- AMD and Samsung's Earnings Point to a Cloud Server Spending Boom - TheStreet - April 29th, 2020
- Organizations are Increasing IT budgets for AI, Cloud, and Security - EnterpriseTalk - April 29th, 2020
- It's your last chance to get this ace VPN deal with 73% off and free cloud storage - TechRadar India - April 29th, 2020
- Atos to Deliver Next Generation Cloud Services to the State of Texas - AiThority - April 29th, 2020
- In the first quarter, Google Cloud's revenue is up 52% year-over-year - FierceTelecom - April 29th, 2020
- Experts warn there are still legal ways the US could obtain COVIDSafe data - ABC News - April 29th, 2020
- 14 ways AWS beats Microsoft Azure and Google Cloud - ARNnet - April 29th, 2020