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Where Cisco Systems Stands in the Worldwide Server Market

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Jan. 2 2018, Published 11:11 a.m. ET

Worldwide server revenue rose in 3Q17

According to market research firm IDC (International Data Corporation), vendor revenue in the global server market rose almost 20% YoY (year-over-year) to $17 billion in 3Q17. It experienced revenue growth after several quarters, driven by demand from cloud service providers. Worldwide server shipments rose 11% YoY to 2.7 million units in the quarter ended September 2017.

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Cisco accounts for 5.8% of this market

IDC’s research director Kuba Stolarski stated, “Hyperscalers continued driving volume demand in the third quarter, with Amazon again leading the charge, as Google and Facebook also began ramping up their server deployments again.”

In the above table, we can see that Cisco Systems’ (CSCO) server revenue rose only 6.9% YoY to $992.5 million in 3Q17. That resulted in a loss of market share. Dell saw a revenue rise of almost 39% YoY to ~$3.1 billion, and its market share rose from 15.7% to 18.7%. It could be benefiting from the EMC acquisition.

ODMs (original design manufacturers) were the largest beneficiaries due to hyperscale server demand. Revenue for ODMs rose 45.3% YoY to $4.1 billion, and their market share rose from 20% in 3Q16 to 24% in 3Q17. Hewlett Packard Enterprise (HPE) continued to lead the server space with a share of 19.5%. However, its revenue fell 1.1% to $3.3 billion since it’s pivoting away from the hyperscale space to focus on enterprise.

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