Link: The Server Market Booms, And It Could Last For A While

“Datacenters certainly came to the fourth quarter of last year hungry, and according to the latest statistics from IDC, they consumed 2.84 million units of iron, a 10.8 percent increase over the prior year’s final quarter. Thanks to IBM’s big bump up with System z14 mainframe sales and to a general trend of buying beefier boxes for hefty machine learning, analytics, and HPC workloads (admittedly but a slice of the server shipment pie), revenues for those servers shipped rose by 26.4 percent to $20.65 billion. This is the first time ever that server sales broke through the $20 billion barrier, and after IDC finishes restating its ODM server revenues for the first quarter of 2017, it is likely that it will report revised sales for all of 2017 to kiss $67 billion. Over that same period, Intel’s Data Center Group will account for $19.1 billion in sales and $8.4 billion in operating profit, just to give you a sense of the chip giant’s slice of the pie. If you are generous and assume that there is a 10 percent operating margin on servers – and that is because big iron NUMA machines and mainframes bring up the class average bigtime even as the ODMs do maybe 5 points of profit at best – that is a potential operating profit for the server industry of around $7 billion. If that is close to reality, then Intel will have around 27 percent of server revenues passed back to it by its OEM and ODM partners as a cost for compoents. If you add Intel’s profit to the server industry’s aggregate profit, and then add in the profit for memory and flash makers, Intel could account for 40 percent of the profit and as much as 50 percent back when memory and flash cost half as much as it did a year ago.”
Original source: The Server Market Booms, And It Could Last For A While

Link: The New HPE Sheriff Lays Down The Hybrid IT Law

“The larger problem, as we have pointed out before, is that it is very difficult to make a buck in the server, storage, and networking business with so many big buyers pushing down prices, enterprises shifting some compute from their own datacenters to public clouds (and therefore some of their budgets from capex to opex), and so many companies competing to sell wares to datacenters.”
Original source: The New HPE Sheriff Lays Down The Hybrid IT Law

How Dell segments out the server market

As detailed by Dell’s Forrest Norrod:

We typically think in big animal terms. The true hyperscale market is a very small set of customers, maybe the top seven to ten players. The scale-out customers sit below these, and include Web tech, HPC, and the large financial institutions for their quant farms. The core enterprise comes next and includes converged, high-value workloads and volume workloads, and finally there is the SMB/value segment. All four of these segments are growing right now. The strongest unit growth is probably on that scale-out space below hyperscale and we are still seeing great opportunities for Web tech and technical computing. I think that HPC is becoming less and less a thing off in the corner and more of a critical component of almost everybody’s business. And the interesting thing from our perspective is not necessarily the exascale ambition and hundreds of millions of dollars in government projects. We are much more interested in the commercial, mid-scale, and educational technical computing areas and we think these are fast growing segments. Core enterprise has returned to growth.

How Dell segments out the server market