India server market revenue rises in Q2, 2018: IDC

The overall server market in India witnessed a year-over-year (YoY) increase of 15.9% in terms of revenue to reach USD 353.1 million in Q2 2018 versus USD 304.6 million in Q2 2017, according to the latest IDC Asia Pacific excluding Japan (APEJ) Quarterly Server Tracker, Q2 2018. The x86 server market registers growth for the third consecutive quarter accounting for 93.5% of overall server market in terms of revenue during Q2 2018. Large deals from IT and ITeS companies and cloud providers followed by Tier-1 telcos, manufacturing and banking continued to drive demand in Q2 2018.

Digitalization is driving and transforming the IT architecture amongst end-users across different verticals resulting in increasing the need to launch new applications and services towards creating innovative offerings for customers. We have observed that application availability and performance are paramount to businesses and would continue to create demand for agile, scalable and robust compute in the coming years.

The non x86 server market generated USD 23.0 million revenue, with a YoY decline of 15 percentage points, in Q2 2018. IBM led the market with a revenue share of 62.6%, followed by Oracle with share of 25.1 and HPE with 12.3% during Q2 2018. Banking remains top vertical with 59.2% revenue share followed by utilities, manufacturing and professional services with 14.7%, 9.6% and 9.0% respectively, during Q2 2018.

The x86 server market in terms of revenue witnessed a YoY growth of 18.9% to reach USD 330.1 million in Q2 2018 up from USD 277.5 million during Q2 2017. Professional services, telecommunications and manufacturing were the top three verticals accounting for 82.2% of the overall x86 server market. In terms of form factor, Rack optimized and blade servers accounts for 3/4th of overall x86 server revenues in Q2 2018.

Source: IDC APeJ Quarterly Server Tracker, Q2 2018

In Q2 2018, the top two vendors kept their positions in the X86 server market. HPE led the India x86 server market with revenue share of 28.4% to reach USD 93.83 million in Q2 2018 followed by Dell with share of 25.0% to reach USD 82.42 million The major deals for HPE came from telecommunications and professional services verticals, while Dell successfully registered incremental deals from existing customers across Professional services and manufacturing. Lenovo has overtaken Cisco as third largest server vendor in India during Q2 2018, due to a big win from one of the largest public cloud service provider; Cisco came fourth winning customers across different verticals with a revenue share of 7.6%. Also, ODM direct market share declined YoY by 0.7% and accounted for 24.1% share in Q2 2018.

IDC India Forecast

Government investment remains as the primary driver towards creating the digital economy. Key investment areas focussed by Government includes Smart city, State Wide Area Network (SWAN), Bharatnet, National supercomputing mission (NSM) and others which are expected to create considerable demand of servers in the coming year.

From vertical standpoint, major telcos spending would be focussed towards preparing for 5G roll out, creating value-added services and modernization of networks across India creating incremental demand of compute. IT and ITeS service providers would realign their focus towards developing new-age technologies such as Analytics, mobility, AI, IoT platforms, blockchain and continue to create incremental demand for servers. Manufacturing end-users spending would be directed towards SCM and ERM solutions which would require substantial compute demand to run the production environment. Banks would continue to spend on traditional compute for monetizing value from chunks of data and providing innovative offerings to their customers.

Nike Paul George PG1