Inspur forges ahead despite 2019 Q2 global server market slowdown
Last week, IDC released the global x86 server market survey data for the second quarter of 2019, showing that x86 server shipments were down 9.8% year-on-year at 2.655 million units, with sales down 10.6% at $1.84 billion. The global server market shrank significantly since the previous quarter.
Inspur climbs against the trend
The top three global sellers and shippers of x86 servers in 2019 Q2 are Dell, HPE/H3C, and Inspur, with a marginal gap between Dell and HPE/H3C. Dell’s shipments decreased by 16.8% year-on-year, while HPE/H3C shipments decreased by 5.8% year-on-year, and their market shares are 18.1% and 16.5%, respectively. Inspur in 3rd place was the only server brand that grew, with sales up 26.6% and shipments up 14.1%, and market share up by 1.8 points to 8.7%. Inspur’s uptick also boosted its market share in the Chinese market; in 2019 Q2, Inspur’s server shipments in China increased by 14.5%, sales increased by 27.8%, and market share increased by 9.6 points compared against the same period last year.
The global server market showed signs of slowing down since last quarter, with shipments beginning to decline, but sales still achieved a year-on-year growth of 6.0%. The market’s decline this quarter was markedly greater, due to a slowdown in CSP (Cloud Service Provider) and hyperscale procurement, and increase in capacity utilization and economic uncertainty. Sebastian Lagana, infrastructure platform and technology research manager at IDC, deduces these factors lead to the sharp decline of server needs in the enterprise market.
Open computing affects CSP procurement
CSP growth may have slowed in the 2019 Q2 quarter, but it is undeniable that this segment’s demand is still the primary force driving market dynamics. Multi-node servers are the only form factor to achieve global sales growth this quarter — shipments increased by 33.0% year-on-year, revenue increased by 19.5% year-on-year, and shipments in the global server market increased from 16.3% to 24.0%. This growth is directly driven by CSP purchases.
Open computing communities such as OCP, ODCC, and Open19 are increasingly affecting cloud service providers. They are introducing open source technologies at every level in the infrastructure to accelerate innovation and optimize the data center. They are simultaneously also actively involved in open technology communities, which have profoundly influenced the development of technology and design in the data center. For example, the multi-node server standard of open computing communities such as Open Rack, Scorpio, and Open19 initiated by CSP has played an irreplaceable role in the development of multi-node servers.
Don’t forget AI development
There are still many areas of growth in spite of shrinking markets. In addition to multi-node servers, the most interesting ones are parallel computing accelerators like GPUs, FPGAs, and ASICs. Another IDC report shows that the global artificial intelligence infrastructure market will reach $6.7 billion in 2018, $22.9 billion in 2023, and a five-year compound growth rate of 27.9%. Servers are a major part of AI infrastructure, and foreseeably Inspur can maintain steady growth not only from CSP orders but also from AI server demands. So much so, that in 2018 Inspur’s share of the Chinese AI infrastructure market exceeded 50%.
Compared with the same period last year, the global server market is in a tough spot and in need for new growth drivers. The past nine quarters of stable recovery not only stems from the improvement of the global economy, but also the rise of technologies like cloud and big data which spawned new procurement needs. Currently, most enterprises lack the strong technical motive to increase procurement, but as AI, 5G, and edge computing slowly enter the mainstream, there is a strong potential for a swell of emerging demand to hit the market in the coming year, and Inspur will be ready to meet that demand when the time comes.