Server Sales Declined a Smidge in Late 2012, but Will Grow a Bit This Year

Much as people talk constantly about the booming future for the construction of data centers and thus for the potential of sales of the gear that goes in them, the market reality is that on a global basis, fewer servers were sold in late 2012 than in the same period in 2011.

The latest market data from research firm Gartner found worldwide server sales declined by 0.2 percent, even as revenue from sales of those servers increased by more than 5 percent. For the full year though, sales increased by 1.5 percent on a unit basis, while revenue declined slightly.

Budget worries caused many companies to hold back on replacing older x86 machines, Gartner said, especially in the enterprise and in some mid-tier data centers. That no doubt factored into some worries around Intel’s outlook when it reported Q4 earnings last month. The only ones really buying were big players like Google, Facebook and China’s Baidu. Sales of RISC-based machines running Unix, as well as specialized hardware like Hewlett-Packard’s Itanium servers, were also weak.

IBM made the most on a revenue basis, clocking in sales worth north of $5 billion, while HP sold the most on a unit basis, with a little less than 664,000 units.

On a regional basis, North America saw unit shipments grow 5.5 percent, followed by Asia/Pacific at 3.4 percent, and Latin America, which was essentially flat.

Europe, on the other hand, declined substantially, and that’s where a lot of the pain was. As sovereign debt and economic concerns continued to take much of the oxygen out of the room in those countries, server sales declined by more than 10 percent on a unit basis, Gartner said. Most companies there saw their unit sales decline except for Japan’s Fujitsu and Cisco Systems. In Cisco’s case, its unit sales grew by nearly 20 percent, but that was off a low base relative to the other vendors. By comparison, Cisco sold about 14,000 servers in the region, versus HP which sold nearly 248,000.

Looking ahead to the rest of 2013, Gartner said to expect modest growth, offset a little by a boost in the use of virtualization, which allows one physical machine to run as if it’s many virtual machines. Virtualization logically tends to eat into the overall volume of machines needed. Simply put, where you once needed two or four or eight servers, it’s pretty likely you can now, given the improvement in processing power plus virtualization, replace them with one or two or three.

Here’s the worldwide breakdown for the top five vendors in the quarter, revenue first.