Is HP Now First Among Server Equals?

“All animals are equal, but some animals are more equal than others.” George Orwell’s quote from Animal Farm just might be appropriate for the market. For years the server market has been a three-headed monster – (units*), (innovation) and (price) – but as took its latest shot at burying the shrinking RISC/Itanium Unix server market, it looks like HP is poised to run the table, from both a unit and an innovation perspective. According to preliminary Q4 2013 numbers from both Gartner and IDC, HP is cementing its leadership in the x86 server market, while both IBM and Dell shipments are falling. HP’s shipments shot up 9% year over year (29.9% of the market), while IBM (8.8%) nosedived 20.3% and Dell (21.1%) dropped 5.4% (IDC). The latest official numbers, for Q3, showed similar results. While overall shipments grew (1.9%) and revenue dropped (2.1%), HP (26.7% share) shipments were up 5.4%, Dell (19.3%) units dropping 14.1% and IBM (8.1%) shipments down a whopping 28%. RISC/Itanium UNIX revenue declined 29.4%. As befitting their marketshare, HP joined IBM, Dell (and ) at the Intel Xeon Processor E7 v2 launch, with the other 17 system manufacturers on board getting honorable mention. rolled out three servers based on the new processors, while Dell unveiled the PowerEdge R920. HP announced the ProLiant DL580 Generation 8 (Gen8) server and upcoming enhancements to the DL560 and BL660c x86 servers, and apparently IBM couldn’t be bothered to unveil anything, perhaps waiting for the pending sales of its x86 server business to Lenovo to go through. IBM hasn’t been able to make headway against the other big server vendors, said Giorgio Nebuloni, Research Manager, Servers, at IDC Europe. With margins in the 15-25% range, x86 servers fell far short of the 40-50% in legacy higher-end servers and 70%-plus in software. So IBM is exiting the market, and Dell and will be able to compete on price, but will have to prove themselves when it comes to value-add technology. That’s an opportunity HP is confident it can exploit, according to Jim Ganthier, Vice President of Global Marketing, HP Servers Group. “Our innovation on industry standards is what sets us apart and we’re just getting started,” he told IT Trends & Analysis. The recent market gains can be attributed, at least in part, to that innovation, said Ganthier. “That’s a reflection of what the CIOs see in that innovation. It’s becoming more and more of the conversation; more and more C-Suite executives are asking for business outcomes.” He talks to hundreds of CIOs a year, and they are looking for breakthrough performance, mission-critical, reliable, lower total cost of ownership and more energy efficient. “How do they deliver more transactions in less time at a lower cost… and turn hindsight into foresight.” Everybody is starting with the same new processor, and talking about performance, but HP will be delivering on that, with a 3-5-month ROI, said Ganthier. “We want to help our customers unleash the power of Big Data.” One way it is doing so is with Project Odyssey, he said. HP’s initiative to unify the Unix and x86 architectures for industry-leading availability, increased performance and client choice, was announced in 2011. “Most of our competitors will stop at the server; we went beyond that.” In the past, x86 servers used to be commodities, but even then they were innovating and winning, Ganthier said. * The designations (units, innovation and price) have been somewhat variable over time.

Author: Steve Wexler

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