FRAMINGHAM, Mass. — (BUSINESS WIRE) — September 14, 2016 — According to the International Data Corporation ( IDC) Worldwide Quarterly Server Tracker, vendor revenue in the worldwide server market declined 0.4% year over year to $13.4 billion in the second quarter of 2016 (2Q16). Overall server market growth has recently slowed in part due to a pause in hyperscale datacenter expansion and is feeling the continued drag from high-end server sale declines. In addition, the robust enterprise refresh cycle of 2015 will create difficult comparisons in 2016 to the prior year’s quarterly results. Worldwide server shipments increased 2.6% to 2.4 million units in 2Q16 when compared with the same year-ago period.

On a year-over-year basis, volume system revenue increased 5.3% and midrange system demand increased 12.7% in 2Q16 to $10.6 billion and $1.3 billion, respectively. Midrange systems were helped by enterprise investment in scalable systems for virtualization and consolidation, as well as increases in x86-based mission critical systems. Meanwhile, 2Q16 demand for high-end systems experienced a year-over-year revenue decline of 31.4% to $1.6 billion on a difficult compare to the prior year. IDC expects continued long-term declines in high-end system revenue.

"The server market is progressing exactly as expected, with close to flat growth in the second quarter, following a difficult first quarter, but growth in volume servers is still healthy, which is a good sign for the market moving forward," said Kuba Stolarski, research director, Computing Platforms at IDC. "As we prepare for the second half of 2016, expect to see market growth led by cloud datacenter buildouts from key hyperscalers. Looking out further, the market will be impacted by digital transformation initiatives, including the Internet of Things and cognitive computing, and by a continuing shift towards software-defined infrastructure."

Overall Server Market Standings, by Vendor

Hewlett Packard Enterprise (HPE) retained the number 1 spot in the worldwide server market with 25.4% market share in vendor revenue for 2Q16, as revenue decreased 0.3% year over year to $3.4 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 maintained its number 2 position in the worldwide server market, building on server revenue growth of 10.0% year over year to $2.6 billion, resulting in 19.3% vendor revenue market share in 2Q16. IBM retained the number 3 position with 9.8% share for the quarter as revenue decreased -34.0% year-over-year to $1.3 billion in 2Q16, as both POWER systems and system z mainframes experienced double-digit declines. Lenovo and Cisco tied* for the number 4 position for the second consecutive quarter with 7.2% and 6.4% market shares, respectively. Lenovo earned $969 million in revenues following an increase of 2.1%, while Cisco's revenues declined 0.7% year over year to $860 million.