FRAMINGHAM, Mass. — (BUSINESS WIRE) — November 30, 2016 — According to the International Data Corporation ( IDC) Worldwide Quarterly Server Tracker, vendor revenue in the worldwide server market declined 7.0% year over year to $12.5 billion in the third quarter of 2016 (3Q16). Overall server market growth had recently slowed in part due to a slowdown in hyperscale datacenter growth and continued drag from declining high-end server sales. In addition, the robust enterprise refresh cycle of 2015 has created difficult comparisons in 2016 to the prior year's quarterly results. Worldwide server shipments decreased 4.6% to 2.38 million units in 3Q16 when compared with the same year-ago period.

On a year-over-year basis, volume and midrange system revenue decreased 4.9% and 4.1% in 3Q16 to $10.3 billion and $1.1 billion, respectively. Server demand across enterprise portfolios was soft for the quarter. Meanwhile, 3Q16 demand for high-end systems experienced a year-over-year revenue decline of 25.0% to $1.1 billion. IDC expects continued long-term secular declines in high-end system revenue.

"The server market suffered a difficult quarter as previously healthy volume server growth faltered, suggesting that weakness in enterprise demand was more pronounced than expected," said Kuba Stolarski, research director, Computing Platforms at IDC. "While cloud datacenter buildouts by key hyperscalers helped in part to prop up the quarterly results, the overwhelming downward trend was difficult to overcome. It remains to be seen whether hyperscale can drive enough demand to keep the market positive going into the home stretch of 2016."

Overall Server Market Standings, by Vendor Group
Hewlett Packard Enterprise (HPE) retained the number 1 spot in the worldwide server market with 25.9% market share in vendor revenue for 3Q16, as revenue decreased 12.1% year over year to $3.2 billion. HPE's year-over-year growth rate was impacted by the start of the H3C partnership in China that began in May of 2016; as a result, a portion of HPE-designed servers were rebranded for the China market and do not count in HPE's market data from that point forward. Dell Technologies maintained its number 2 position in the worldwide server market with 17.8% of vendor revenue for the quarter, while revenue decreased 8.7% year over year to $2.2 billion. Lenovo and Cisco both moved up into a three-way tie* for the third market position with IBM, with 7.9%, 7.4%, and 6.9% revenue share, respectively. Lenovo's revenue declined 7.4% to $986 million, while Cisco grew its revenue 4.8% to $928 million. IBM's revenue decreased 32.9% year over year to $864 million in 3Q16.