The x86 server segment remained the main growth engine, with revenue of $2.6 billion, down 4.9% annually and equivalent to 68.7% of the total market (a decline in market share from the previous quarter, when x86 systems reached 76.4% of the total server value market in EMEA). Industry standard servers also suffered a decline in volumes, with shipments down 10.8% annually.
Non-x86 sales fared a bit better in 4Q12 with revenue slightly above the $1 billion mark despite annual declines of 12.5%, which was nevertheless a softer decrease than in 3Q12 when the technology was down 20.3% year on year. Although the signs of moderate recovery in the non-x86 market must be put in the context of seasonality factors — the last quarter of the year has historically been the strongest for legacy sales — there is no doubt that this shows a more balanced outlook partly due to CPU refresh cycles hitting some of the major platforms, specifically mainframes.
EMEA Market Highlights
"After three quarters of dollar revenue declines of around 11%, the market showed a little stabilization, thanks mostly to a more favorable comparison to 4Q11 and a cyclical rise in mainframe sales," said Giorgio Nebuloni, research manager, Enterprise Server Group, IDC EMEA. "The picture for the full 2012 was nevertheless negative, with a 10% yearly decline in dollars and -3% in euros. Volumes remained under considerable pressure in 2012, down 7% yearly, as consolidation and macroeconomic factors took their toll. If one compares that to the slower, but still slightly positive growth in compute capacity during the past year, it appears clear that datacenters are really learning how to do more with less."
Western European Highlights
The Western European market continued to reflect the general trend toward x86 servers, although this trend slowed, with industry standard servers generating $1.8 billion, or 67.3% of total factory revenue in 4Q12 (compared with 76.2% in 3Q12). Non-x86 sales increased their share of the Western European market this quarter, generating $919.91 million, or 32.7% of total sales, a near 10 percentage point increase on the 23.8% seen in 3Q12.
"Legacy architectures displayed greater dynamism in 4Q12 than we have been used to of late, partly due to seasonality factors but also because of mainframe refreshes by IBM, which launched the zEC12 architecture in early 2H12. Despite this, the rate of decline in non-x86 revenue in the Western European region continued to be quite strong, with sales declining by 11.4% against a decline of 6.4% for industry standard servers," said Beatriz Valle, senior research analyst, Enterprise Server Group, IDC EMEA. "In Western Europe, demand in all big three countries was subdued with double-digit spending declines and high-single-digit drops in spending also for the x86 part. Public sector spending remains under pressure and financial services organizations are shrinking their IT budgets and driving less demand for server hardware."
"Central and Eastern Europe, the Middle East, and Africa [CEMA] combined continued to decline in 4Q12, displaying a 5.3% year-on-year decrease. Server revenue totaled $990.51 million, which was the lowest fourth quarter over the last three years. Governmental entities, which are a significant source of server purchases, showed increased uncertainty and lower demand in 4Q across the CEMA region. Lackluster performance in the second half of the year brought down overall results for 2012, which declined 3.7% in revenue," said Jiri Helebrand, research manager, IDC CEMA.
"Central and Eastern Europe [CEE] declined by 8.1% in revenue, down to $571.90 million. Consolidation and cost reduction are the main theme across organizations, and even though IDC recorded strong server sales in Hungary, Kazakhstan, and the Czech Republic, it was not enough to offset weak demand in Poland and Russia. Server sales in the Middle East and Africa [MEA] declined by 1.2% year on year, generating revenue of $418.61 million in 4Q12. The Middle East region fared much better compared with Africa and displayed a positive year-on-year increase of 5.2%, benefiting from strong sales to the education segment in Saudi Arabia and healthy demand from the finance and telco sectors in Turkey," said Helebrand.
Modular Server Highlights
Blades declined 6.3% annually, as the technology matures and after reaching $730.5 million in sales. Density optimized servers enjoyed strong annual increases of 79.5%, and overtook the $100 million mark after reaching $107.9 million. Sales of this technology continue to be a small niche in the market at 2.8% of the total in EMEA.
"The share of modular servers has declined in the EMEA region compared with 3Q12. This decline is mainly down to an increase in non-modular rack-optimized server shipments, with the share of this server type increasing from 49% to 52% of overall x86 units shipped," said Andreas Olah, research analyst, Enterprise Server Group, IDC EMEA. "The number of blades has only slightly grown, while a drop in density optimized server shipments has been observed, with the sharpest drop in Germany and Ireland. This is not surprising, considering that 3Q included some large one-off supercomputing projects such as SuperMUC, which relied mainly on density optimized servers. At the same time modular server shipments increased in Spain, the Netherlands, Finland, and France, which has mainly been driven by hosters and service providers investing in new datacenters. There are also signs that southern European markets are picking up slowly following several quarters of decline."
• x86 revenue reached $2.6 billion, equivalent to 68.7% of the total market, a decline of 4.9% annually. This was the 16th consecutive quarter in which x86 sales surpassed non-x86 servers, as the market trend toward industry standard servers consolidates across EMEA. As IDC predicted last quarter, legacy platforms displayed improved performance in 4Q12, although this was concentrated on mainframe uptake. CISC server revenue reached $572.89 million in 4Q12 and was up 17.0% annually driven by strong IBM System z sales. Other legacy technologies, however, did not fare as well. RISC revenue reached $496.33 million, down 26.0% annually, followed by EPIC with revenue of $120.4 million, down 39.6%. The average rate of decline in the non-x86 market was 12.5% yearly.
• By operating system, Windows-based servers held 49.5% of hardware spending (around $1.9 billion), down 4.4% year on year. Linux declined 5.4% after generating sales of $719.4 million, around 18.9% of the total market. 4Q12 was the fifth time that Linux overtook Unix in revenue share. Unix declined 30.6% on the back of weaker RISC system sales, and reached sales of $545.6 million, equivalent to just 14.4% of the total market. Of the main operating systems, only z/OS enjoyed improved performance on an annual basis, growing 16.7% and generating $486.6 million.
• Volume servers priced at $25,000 or below remain the mainstream form factor and now take up 62.5% of total revenue, or $2.3 billion, despite a decline of 5.7%. However, the total share of the market for volume servers decreased from 71.0% in 3Q12 because the high-end segment market share increased, driven by CISC revenue. The midrange segment was squeezed in the middle with a decline of 12.6% after sales hit only $405.86 million, around 10.7% of the market. High-end server revenue also suffered declines, albeit less pronounced at 9.1%, reaching $1.0 billion in sales.
• From a form factor perspective, racks remained the single largest segment of the market, with $1.9 billion, equivalent to 50.2% of total sales. Moreover, racks were the most resilient technology, with the rate of decline at a mere 2.0% annually, well below the market average. Tower or standalone servers suffered a sharp decline in revenue, down 19.9% year on year. However, towers retained second position, with 27.8% of total revenue, with blades taking 19.2% of total revenue. Pedestal revenue results this quarter might have been distorted on the back of mainframe demand, however.
Vendor Highlights, 4Q12
IBM gained the 1st spot in EMEA with a share of 35.7% of the total market in 4Q12, and the single-digit revenue decline of 4% was much softer than seen in previous quarters in 2012. Although the vendor's x86 systems were the top revenue-generating stream, with the System x and xSeries accounting for 36.8% of business, they were very closely followed in the product mix by CISC-based systems. HP lost the top place it usually holds in the EMEA server market during 4Q12, despite once again surpassing the $1 billion mark with its industry leading ProLiant line of x86 servers. HP remained the x86 leader, with the ProLiant line reaching the equivalent of 43.4% of the total x86 market in EMEA.
Dell increased its share of the EMEA server market by 0.6 percentage points in 4Q12, although the vendor's PowerEdge line declined slightly, at 2.6% annually. Fujitsu grew its market share by 0.8 percentage points year on year, and enjoyed double-digit revenue growth, by increasing sales 10.2% annually. The x86 Primergy line accounted for 64.7% of the vendor's revenue and was up 10.5%, while the BS2000/OSD family of mainframe servers saw revenue grow 8.9% year on year. Oracle's revenue declined 25.2% year on year, with its family of RISC Unix SPARC systems down in the double digits. Oracle is growing its share of server sales in the area of x86-based solutions, thanks to the expanding family of Engineered Systems.