Singapore and Hong Kong, March 13, 2014 – Server revenues in Asia/Pacific excluding Japan (APEJ) region grew a modest 1.3% to total US$9,985 million in 2013, coming in just short of the magical US$10 billion mark, according to IDC. The modest growth in 2013 was in sharp contrast to the heady 17% growth recorded in 2010 and 2011, fuelled by massive infrastructure buildout by Web 2.0 and cloud service providers in the PRC. Despite the sharp deceleration in growth in 2013 compared to the previous years, server market in APEJ continued to outperform other regional markets on a worldwide basis.
“Strong adoption of server virtualization and cloud technologies in the enterprise segment, rapidly increasing appeal of public cloud providers for specific workloads, and growing interest in Integrated Systems were some of the key technology disruptions that impacted the server spending growth in 2013,” says Rajnish Arora, Associate Vice President of IDC’s Asia/Pacific Enterprise Computing Research. “Global economic malaise, lack of aggressive economic reforms in emerging economies, and political turmoil coupled with upcoming federal elections in certain countries were some of the non-technology factors that stymied server spending growth in 2013.”
The PRC, which has increasingly become the bellwether and cornerstone of the APEJ server market since 2008, grew at a much more anemic pace in 2013. The Web 2.0 and public cloud services providers such as Tencent, Baidu and Alibaba building hyper-scale datacenters, who were responsible for driving the heady demand for servers in the PRC for the past several years, took a breather in 2013 that impacted the spending growth. “Server spending plunged more than 21% in Australia and New Zealand in 2013 because customers are aggressively adopting cloud and cloud technologies to help build a much more agile and flexible IT infrastructure that is much more responsive, adaptive and predictive to the dynamic needs of the business,” opines Arora.
Server Market Competitive Landscape Rapidly Changing
The combined revenue share of the top three vendors – HP, IBM and Dell in APEJ has steadily declined from an all time high of 82.4% in 2010 to 70.7% in 2013. The biggest gains have been made by the Chinese vendors – Inspur and Huawei, on the back of blistering growth in their home market. Inspur surged past Oracle to take the number 4 spot in revenue market share rankings in 2013, while Huawei’s astounding growth underpinned its entry into the list of top 5 vendor rankings in APEJ.
“Taiwanese ODMs (Original Direct Manufacturers) accounted for a little more than 2% share of the total server market in revenue terms in 2013, despite the significant hype around the emergence and growing impact of these suppliers on the traditional server vendors. IDC’s research shows that the ODMs are primarily catering to the unique demand and needs of the cloud service providers building hyperscale datacenters, rather than make a big dent into the traditional enterprise customers segment,” says Amit Dalal, Research Manager of IDC’s Asia/Pacific Enterprise Server Research.
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