• The Four Hundred
  • Subscribe
  • Media Kit
  • Contributors
  • About Us
  • Contact
Menu
  • The Four Hundred
  • Subscribe
  • Media Kit
  • Contributors
  • About Us
  • Contact
  • Servers Cool A Bit In Q3, But The Market Is Still Hot

    December 9, 2019 Timothy Prickett Morgan

    All temperatures are relative. While the appetite for servers cooled a bit in the third quarter, according to the latest statistics from IDC, the decline is relatively modest and the period ended up still being one of the largest in history, thanks in large part to the appetite of hyperscalers and cloud builders for zillions of X86 servers.

    The declines were much more intense for midrange and big iron systems, which is typical given the product cycles from IBM. The Power9 chip is about halfway through its product cycle, and the System z15 mainframe was only announced a few weeks before the third quarter ended and could not really help on that front.

    In the third quarter, IDC reckons that the world consumed 3.07 million server units, a decline of 3 percent compared to Q3 2018, and thanks in part to something closer to normal (meaning lower) pricing for flash storage and DRAM memory, revenues fell by 6.7 percent to $21.99 billion. That was the second largest number of machines shipped, just a tad behind the 3.16 million machines that shipped in Q3 2018. This is a lot of machinery.

    If you look at revenues by product category, then the volume segment, which covers machines that cost $25,000 or less, aggregate revenues were $17.9 billion, down 4 percent year on year. The slump hitting midrange iron, which in IDC’s worldview is for machines that cost between $25,000 and $250,000, was more intense, with sales down 14.3 percent to $3 billion. High end machines, which means those that cost more than $250,000, were hit the hardest, down 23.7 percent to $1.1 billion.

    If you look at the market as X86 versus everything else, then here is the trendline since the Great Recession:

    Sales of X86 iron were off 6.2 percent to $20.6 billion year on year, but sequentially at least it started growing. Non-X86 machinery accounted for $1.4 billion in sales, down 13.1 percent. The gap between the alligator’s top and bottom jaws keeps getting wider as the jaws get longer with time, as you can see from the chart above.

    IBM is no longer in the top five vendors in terms of revenues per quarter, and has not been for a few quarters, and has not been a top server shipper since it sold off its X86 server business to Lenovo five years ago. So in the table below, which shows the revenues by vendor, we have had to estimate IBM’s revenues. It is interesting to us that Inspur, which is IBM’s big Power9 chip partner and which sells lots of Power9 machinery in Asia and some in Europe and North America, has basically taken the third place spot that IBM held for many years.

    Some of this switcheroo is because IBM has walked away from trying to sell into China and has let its partners have that market. Big Blue had very little choice but to do this in the Middle Kingdom. The Chinese government doesn’t give companies much of a choice. It wants to sell indigenous iron as much as possible on the homefront and to leverage its economies of scale and scope to get more share of the rest of the world. Inspur, as you see in the table above, is really bucking the declining revenues trends, and Cisco Systems beat the market in Q3 as well.

    It is also interesting to us that if you look at shipments of the ODM Direct group that largely builds machines for the hyperscalers and cloud builders, shipments were up 2.9 percent to 896,625 units, according to IDC, in a market that had 3 percent shipment declines overall. What this means is that the hyperscalers and cloud builders are either getting great pricing on machines or are benefitting more than the rest of the market from lower component prices and competition and therefore their average server price is coming down.

    RELATED STORIES

    IBM And Inspur Power Systems Buck The Server Decline Trends

    Server Buying Cools, But It’s Cool – Don’t Panic

    Power Systems Bucks The IBM Trend And Grows

    IBM’s Plan For Etching Power10 And Later Chips

    The Road Ahead For Power Is Paved With Bandwidth

    IBM Puts Future Power Chip Stakes In The Ground

    Inspur Joins OpenPower To Build Power Machines

    Share this:

    • Reddit
    • Facebook
    • LinkedIn
    • Twitter
    • Email

    Tags: Tags: hyperscalers, IBM i, Power9, X86

    Sponsored by
    COMMON

    We Are Stronger Together!

    On behalf of the IBM i community, thank you to our valued COMMON members. We recognize and understand the challenges our members have faced this year, and we have faced many of the same challenges. As always, we are committed to our members and this community, and are working tirelessly on your behalf. Showing our commitment, we have decided not to increase dues for 2021. Through these unprecedented times, our top priorities remain serving the membership, providing benefits to support your career, and being the voice of our members and the industry.

    It’s Time to Renew

    Now more than ever, COMMON is essential to the IBM i community. We respectfully ask for your continued support by renewing your membership.

    Your continued commitment to COMMON enables us to:

    • Develop valuable in-person and on-demand education
    • Connect you with peers, industry experts, and vendor partners
    • Boost the visibility of your business as an IBM i leader and help you stay informed about the opportunities ahead
    • Reinforce the value of IBM i through educational programs, events, and services
    • Spotlight issues and gain visibility for the IBM i community
    • Provide timely communications about issues that impact our members
    • Provide resources such as online job postings, an expanded web presence through the membership directory, and digital advertising opportunities

    COMMON is strong because of YOU. Together, we will tackle these challenges, no matter what the future may bring, and ensure not only that the IBM i community will get through this, but will thrive.

    Renew Your Membership Now

    Share this:

    • Reddit
    • Facebook
    • LinkedIn
    • Twitter
    • Email

    Join Us For The IBM i On The Public Cloud Webinar As I See It: When Gates Was Young

    Leave a Reply Cancel reply

TFH Volume: 29 Issue: 73

This Issue Sponsored By

  • Blair Technology Solutions
  • Fresche Solutions
  • Syniti, formerly BackOffice Associates
  • ARCAD Software
  • Raz-Lee Security

Table of Contents

  • Moving Off Big Iron? Be Very Careful, Gartner Says
  • Thoroughly Modern: More Than Just A Pretty Face
  • Guru: More End Of Year Feedback
  • As I See It: When Gates Was Young
  • Servers Cool A Bit In Q3, But The Market Is Still Hot

Content archive

  • The Four Hundred
  • Four Hundred Stuff
  • Four Hundred Guru

Recent Posts

  • 2021 Predictions for IBM i, Part 1
  • West Four Stands Out With On Demand Color Label Printing
  • HelpSystems Acquires Data Security, File Transfer Companies
  • Four Hundred Monitor, January 13
  • IBM i PTF Guide, Volume 23, Number 2
  • Seiden Group Unveils A PHP Distro For IBM i
  • Thoroughly Modern: DevOps Refactoring Of RPG Applications with RDi
  • Guru: Fall Brings New RPG Features, Part 2
  • More Vintage Power Systems Feature Withdrawals
  • IBM i PTF Guide, Volume 23, Number 1

Subscribe

To get news from IT Jungle sent to your inbox every week, subscribe to our newsletter.

Pages

  • About Us
  • Contact
  • Contributors
  • Four Hundred Monitor
  • IBM i PTF Guide
  • Media Kit
  • Subscribe

Search

Copyright © 2021 IT Jungle

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.