Healthy IT spending levels at North American and European enterprises, coupled with cloud service provider (CSP) investment and a large number of government high-performance compute (HPC) deployments, led to a strong finish to 2018. Server revenue grew 12 percent quarter over quarter, and 15 percent year over year, to reach $22.8 billion in the fourth quarter. Total 2018 server revenue was $81 billion, up 27 percent year over year, with unit shipments of 11.4 million, up 8 percent year over year.
“We continue to expect an acceleration in worldwide compute demand will drive server shipment growth,” said Vladimir Galabov, principal analyst, IHS Markit. “As the number of connected devices ramps up, the effect of multi-tenancy is further diminished, and the average annual increase in compute capacity per general-purpose central processing unit (CPU) slows, ẁe are projecting an upward growth curve from now through 2023.”
Server architecture diversification continued in the fourth quarter, with Arm-based and AMD x86-based servers multiplying and the first shipments of servers with AMD’s 7 nanometer (nm) GPGPU and Graphcore’s Intelligent Processor Unit (IPU) co-processors. Tier 2 CSPs grew ahead of hyperscale CSPs, a trend that will continue through 2023, as enterprises look to second-tier CSPs for increased interaction and support and as governments in Europe, Middle East and Africa and Asia Pacific favor local CSPs. Hyper-converged infrastructure (HCI) adoption continued, with vendors reporting deployments at large-scale enterprises and an increase in dollar value of individual deals. This momentum is expected to continue in 2019.
“Increasing demand for compute at the edge, particularly from enterprises and telecommunication network providers, has spurred HPE, Lenovo, Inspur and other vendors to develop new server form factors that can withstanding harsh weather conditions, dust and vibration,” Galabov said. “These new designs are set to disrupt the server market in 2019.”
White box vendors led the market
A year after becoming the server unit-shipment leader, white box vendors also went on to lead revenue share, with 20.2 percent in the fourth quarter of 2018. Dell EMC followed with 19.5 percent, HPE came in third with 16.7 percent. Rounding out the top five were Inspur with 7.9 percent and IBM with 6.6 percent.
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 Intelligence Service include Broadcom, Canonical, Cavium, Cisco, Cray, Dell EMC, Docker, HPE, IBM, Huawei, Inspur, Intel, Lenovo, Mellanox, Microsoft, Red Hat, Supermicro, SUSE, VMware, and White Box OEM (e.g., QCT and WiWynn).