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What IDC’s 4Q19 Server Tracker Said About Dell, Inspur and Lenovo

IDC reported 7.5% server-market revenue growth and 14.0% shipment growth in 4Q19, while Dell, Inspur and Lenovo followed sharply different paths.
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IDC’s fourth-quarter 2019 tracker showed a server market recovering in two different ways: worldwide revenue rose 7.5% year over year to $25.3519 billion, while shipments climbed 14.0% to 3,403,323 units. Dell remained the shipment leader despite declines in both measures; Inspur grew in revenue and shipments; and Lenovo’s shipments surged while its revenue fell. These are historical results published March 12, 2020, not a picture of today’s market.

What did IDC’s 4Q19 server tracker say about Dell, Inspur and Lenovo?

The results do not support a simple winner-and-loser ranking: vendor positions differed depending on whether the measure was revenue or shipments. IDC also reports some companies together because of joint ventures, and treats revenue-share differences of one percentage point or less as statistical ties.

Vendor grouping Revenue and share Shipments and share Year-over-year change
Dell Technologies Statistically tied for first in revenue share with HPE/New H3C; Dell had 15.7% versus HPE/New H3C’s 16.3%. 549,488 units; 16.1% share, the largest shipment total. Shipments declined 5.4%; revenue also declined, though the release summary does not state Dell’s revenue change.
Inspur/Inspur Power Systems $1,736.1 million; 6.8% share. 270,567 units. Revenue rose 12.1%; shipments rose 9.3%.
Lenovo $1,417.6 million. 233,896 units. Revenue declined 2.6%; shipments rose 22.6%.

IDC’s statistical tie convention is important: the 0.6-percentage-point difference between HPE/New H3C and Dell in revenue share does not make the result an unqualified sole lead for either company. IDC has reported HPE with New H3C as one global grouping since 2Q16, and Inspur with Inspur Power Systems since 3Q18, reflecting their respective joint ventures. The figures and definitions in this article come from IDC’s March 12, 2020 release: IDC’s 4Q19 server market results.

Why did shipments grow faster than revenue?

Shipments increased 14.0% while revenue grew 7.5%, so the market sold substantially more units without an equivalent increase in aggregate dollars. That gap is consistent with a shift in the mix of systems sold: lower-priced systems can lift unit counts faster than revenue. ServeTheHome calculated an approximately 6% overall average-selling-price decline from the results and a much steeper decline for Lenovo; those are that publication’s derived calculations, not separate IDC statistics or proof of a single cause.

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The broader market’s strongest expansion was in ODM Direct, the vendor group serving large cloud and hyperscale buyers. It recorded $6,470.9 million in revenue, 25.5% of the total, up 37.9%; shipments grew 53.0% to 1,054,743, or 31.0% of units. IDC said robust hyperscaler demand benefited ODM Direct, while strong purchases of non-x86 servers also contributed to overall growth. The release characterized the quarter as mixed: “While the server market recaptured growth during the fourth quarter, it was a bit of a mixed bag as robust hyperscaler demand benefited the ODM Direct vendor group, which combined with strong non-x86 server purchases to drive the broader market,” said Sebastian Lagana, IDC research manager for Infrastructure Platforms and Technologies.

Which server segments and regions grew?

Performance varied by server class and architecture, underscoring why the overall growth rate does not describe every part of the market.

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Market segment 4Q19 revenue Year-over-year change
Volume servers $19.7 billion Up 12.1%
Midrange servers $3.3 billion Down 14.1%
High-end servers $2.4 billion Up 8.9%
X86 servers $22.4 billion Up 6.3%
Non-x86 servers Just under $3.0 billion Up 17.7%

Regionally, revenue increased 19.3% in Canada, 19.0% in Latin America, 15.5% in the United States, 5.2% in Japan, 4.2% in Asia/Pacific excluding Japan, and 6.7% in China. EMEA revenue declined 5.2%. IDC also noted that 4Q18 was an unusually difficult comparison for OEM x86 vendors because many had posted double-digit growth on large revenue bases, a context for the tepid OEM x86 result in 4Q19.

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How to read IDC’s vendor revenue figures

IDC’s vendor-revenue measure covers dollars recognized by multi-user system and server vendors for initial server shipments and upgrades through direct and indirect channels. It includes bundled system components and software. The tracker breaks quarterly revenue and shipments down by vendor, product family and model, region, operating system, price band, CPU type, and architecture. These definitions make the reported revenue broader than a count of hardware units alone.

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