Chinese server makers grow at expense of US vendors in Q1

Server shipments in Q1 for Chinese companies Huawei and Inspur went up, while HP, Dell and IBM shipments declined

Shipments of servers from Chinese vendors grew at a fast clip while the top server vendors in the US tumbled during the first quarter of this year.

Worldwide server shipments were 2.3 million units during the first quarter, growing by just 1.4 percent compared to the same quarter last year, according to Gartner.

Growth was driven by Chinese server vendors Huawei and Inspur Electronics, which were ranked fourth and fifth, respectively, behind the declining Hewlett-Packard, Dell and IBM.

Huawei has been in the top five for server shipments for more than a year, but Inspur Electronics is a new entrant. Inspur builds blade servers, rack servers and supercomputers, and is best known for being involved in the construction of China's Tianhe-2, which is currently the world's fastest supercomputer, according to Top500.org.

Chinese servers partly benefitted from the 18 percent shipment growth in the Asia-Pacific region, while shipments in other regions declined, Gartner said in a statement.

Server buying trends have changed in recent years. Companies like Facebook, Google and Amazon, which buy servers by the thousands, are bypassing established server makers and purchasing hardware directly from manufacturers like Quanta and Inventec. That trend in part led to the establishment of the Open Compute Project, a Facebook-led organization that provides server reference designs so companies can design data-center hardware in-house.

Similarly, Chinese Cloud providers are building mega datcacentres and buying servers from local vendors instead of going to the big name brands, said Patrick Moorhead, analyst with Moor Insights and Strategy.

The trend of buying locally is partly due to the security tension between the US and China, but servers from Chinese companies are also cheaper, Moorhead said.

The enterprise infrastructure is also being built out in China, resulting in a big demand for servers. There is also a growing demand for servers from little-known vendors based in Asia -- also known as "white box" vendors -- in other regions, Moorhead said.

But the top server companies are making moves to expand in the low-cost server market. HP last month signed a deal with Foxconn to make low-cost cloud servers for scale-out environments, while Dell is attacking the market through its Data Center Solutions division. IBM has signed Chinese companies to use its Power architecture in chips and servers, and Lenovo earlier this year agreed to acquire IBM's x86 server business for $2.3 billion.

Inspur's shipments totaled 80,929 units, growing by a whopping 288.7 percent compared to the same quarter the previous year, while Huawei shipped 85,919 units, growing by 61 percent. Top server maker HP shipped 534,652 units, declining by 7.9 percent, while second-placed Dell shipped 464,141 units, declining by 10.1 percent. IBM suffered the worst decline, with shipments falling by 27.8 percent to 166,311 units.

Worldwide server revenue declined by 4.1 percent during the first quarter to $11.3 billion compared to the same quarter the previous year. HP, IBM and Dell were the top three server makers by revenue, and all recorded quarterly declines.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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Agam Shah

IDG News Service

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