“There were only three regions that exhibited positive vendor revenue growth. They were Canada at 6.5 %, the Middle East and Africa at 12.1 % and the United States with 0.9 % growth. In shipments, the Middle East and Africa had the greatest increase at 13% compared to the third quarter of 2012.”

“x86 servers maintained low levels of growth at 2.1% in units year-on-year and 4.4% in revenue. RISC/Itanium Unix servers continued to decline at 4.5% and 31% in vendor revenue compared to the same quarter last year. The ‘other’ CPU category, which is primarily mainframes, showed an increase of 7.8 %,” Mr. Hewitt said.

Figure 1 : Worldwide: Server Vendor Market share, 3Q13

HP had the lead in the worldwide server market based on revenue (see Table 1). The company posted just over $3.4 billion in server vendor revenue for a total share of 27.6 % worldwide for the third quarter of 2013. This was up 2.2% year-on-year.

HP and Cisco were the only vendors in the top five to have revenue increases in the third quarter of 2013.

In server shipments, HP remained the worldwide leader in the third quarter of 2013 (see Table 2) with a year-on-year shipment increase of 5.4% for the quarter. HP’s worldwide server shipment share was 26.7 % representing a 0.9% increase in share from the same quarter in 2012.

Of the top five vendors in server shipments worldwide, only HP and Huawei produced shipment increases in the third quarter of 2013.

In terms of server form factors, blade servers fell 1.5% in shipments, but grew 3% in revenue in the quarter. The rack-optimized form factor climbed 2.6% in shipments and, but fell 1.8% in revenue for the third quarter of 2013.

In Europe, the Middle East and Africa (EMEA), both server shipments and revenue declined in the third quarter of 2013. Server shipments totaled nearly 548,000 units in the third quarter of 2013, a decrease of 7.2 % from the same period last year (see Table 4). Server revenue totaled $2.8 billion in the quarter, a decline of 4.3 % from the same quarter last year (see Table 3).

“The performance of server shipments and revenue in EMEA is in a downward spiral,” said Adrian O’Connell, research director at Gartner.

“Revenue has now declined for nine consecutive quarters and shipments have declined for eight. Server revenue across EMEA is at its lowest level for over 15 years which underlines the increasing contraction of the server market.”

From a regional perspective, both Western Europe and Eastern Europe declined in revenue, with a decline of 4.8% and 13%, respectively. The Middle East and Africa was the only region to exhibit revenue growth with an increase of 12.1%.

In the third quarter of 2013, x86 server revenue decreased 0.1 percent, while RISC/Itanium UNIX revenue declined 29.4% and the Other CPU segment revenue increased 15.2%. The non-x86 platforms continued to suffer from platform migrations, although the RISC/Itanium UNIX platform is the most adversely affected.

“The fourth quarter is typically the strongest quarter of the year for these platforms, but even a strong end to the year will not change the long term downward trend,” said Mr. O’Connell.

In terms of vendor performances, three vendors in the top five ranking showed a revenue decline in the third quarter of 2013. HP maintained its lead in terms of overall revenue, delivering a revenue increase of 1.1% as it continues to improve its execution.

Second-ranked IBM saw its revenue decline 19.2% as the positive effects of its mainframe refresh diminished. Fourth-ranked Fujitsu was amongst the two vendors in the top five to see a revenue increase, at 1.5%.

Cisco, ranked in the No. 6 position, closed the gap with fifth-ranked Oracle in the third quarter of 2013, with less than 1% market share difference between the two vendors. Cisco was also the only top five vendors to exhibit a shipment growth in the third quarter of 2013, achieving a double-digit shipment growth. Cisco’s focus on the blade server segment is helping it to achieve strong competitive gains at a time when the overall market is getting increasingly constrained.

“Weak demand continues to make EMEA one of the hardest regions for server vendors to do business in,” said Mr. O’Connell.

“The market is resetting itself to a new level with architectural shifts making life very challenging for vendors that have relied on high-end platforms in the past. The ongoing economic weakness plays its part here, but there is also a broader shift taking place that brings a new set of competitive challenges. The fourth quarter is also expected to be weak, making 2013 a year to forget for most server vendors.”