Proprietary And Unix Systems Decline In Q4, X86 Up A Smidgen
March 3, 2014 Timothy Prickett Morgan
Let me start by saying that I did not create the language that is used in the computer business, particularly in the server racket, with a few exceptions. I don’t like the terms “proprietary,” and I don’t like the terms “industry standard” as if all of the customers and vendors got together and created a non-proprietary machine. Best I can figure, the X86 architecture is still pretty much ruled by Intel and Windows was still the dominant operating system on X86 machines.
It is with this in mind that we go over the final quarter of server sales for 2013 using statistics from Gartner. The company, like its rival IDC, has a multidimensional database that allows analysts to dice and slice the market in a zillion different ways, but the data they provide for free looks at the market in only a few ways. The top five vendors by revenue and shipments, and then some ancillary data for pesky members of the press (like me) who want a little more detail that breaks out RISC and Itanium machines running Unix and machines based on X86 processors by revenue and shipments.
The good news is that despite big declines in mainframe and other proprietary systems as well as in Unix machinery, the market was nonetheless able to grow shipments by 3.2 percent to 2.58 million units. However, as price competition in the Unix market continued and vendors had to slash priced to compete against X86 iron, and the IBM mainframe cycle shifted from selling new boxes to activating latent capacity on existing machines, revenues took an inevitable hit across all platforms. Add it all up, and Gartner estimates that worldwide server revenues fell by 6.6 percent in the fourth quarter of last year, to $13.66 billion.
Here are the rankings by revenues for the top five vendors:
And here are the rankings by shipments:
Gartner says that hyperscale datacenters are buying like crazy but enterprises have been cautious about spending. Some might say enterprises are offloading some of their capacity to public clouds, particularly for application development, and are continuing to boost efficiencies through server virtualization. This along with the relentless pace of Moore’s Law, you will remember from the late 1990s, is exactly what turned the AS/400 business from something close to $4.7 billion a year in sales to what is probably around $500 million a year today. Virtualization is a bitch, and Intel ought to be thankful that VMware‘s overhead with ESXi is as high as it is.
In the fourth quarter, the Unix market, upon which the Power Systems line largely depends (and hence, so do IBM i customers to a certain degree), saw shipments drop by 24.1 percent to 28,868 machines and revenues fell by 22.9 percent to $1.51 billion. IBM was the revenue leader in Unix, with $866.6 million in sales, but stomached a 28.4 percent revenue drop. A lot of this can be attributed to the fact that IBM has made it known it will launch new Power8 machines around the middle of this year. So those customers who can wait are going to do just that. Oracle had $306.9 million in Solaris systems sales, down 10.1 percent, and HP’s HP-UX biz had a 21.3 percent decline to $269 million.
If you drill down into the numbers for 2013, the Unix market based on either RISC or Itanium processors comprised a total of 110,929 shipments in the quarter, down 23 percent year-on-year; revenues from these machines fell by 26.5 percent to $5.8 billion. That is still a lot of dough, mind you. But the Unix market was once close to half of a server market that was about the same size as it is today, back in the days of the dot-com boom.
The X86 market continues to eat both shipment and revenue market share, which is Intel’s most heartfelt desire. (Well, right up to the point where is has a monopoly and the governments of the world step in to regulate it.) In the fourth quarter, X86 servers accounted for 2.55 million machines, up 3.8 percent from Q4 2012, and generated $10.44 billion in revenues, up 4.3 percent. For the full year, vendors sold some 9.76 million X86 boxes, up 2.6 percent, and those generated $39.72 billion in revenues, up 3.2 percent. For the full year–and you almost have to look at this on an annual basis because of the lumpiness of hyperscale and supercomputer sales these days–Hewlett-Packard was the dominant X86 vendor, with $11.92 billion in sales, but its sales fell 2.2 percent. Dell grew its X86 business by 4.9 percent to $8.41 billion, and IBM saw a 13.6 percent decline to $4.85 billion. (The rumors of the selloff of the System x business to Lenovo did not help IBM all throughout 2013, that’s for sure.) Cisco Systems, now in its fifth year as a server vendor, grew by 38.7 percent to $2.23 billion and looks well on its way to building a server business that could level out at around $4 billion.
That leaves Others, the category where so-called proprietary platforms are lumped together. Shipments of these proprietary machines came to only 9,641 machines according to Gartner, down 53.3 percent from the prior year, and generated $5.65 billion in revenues, down 20.2 percent. Those are the numbers for all of 2013, not the fourth quarter, and include IBM and Unisys mainframes and presumably Power Systems machines running IBM i. I simply do not believe IBM i shipments are as low as Gartner’s numbers imply.