Posted by New Delhi: The Server market revenue in India witnessed a 22.1 fall year-over-year (YoY) with $232.1 million in revenue for 1Q2020 (Jan-Mar) versus $298.0 million in 1Q2019. The data released on Tuesday are from the latest IDC Worldwide Quarterly Server Tracker, 1Q2020 .
The server market in India has mainly two parts – x86 and non-x86 servers. In terms of revenue, the x86 servers segment witnessed a 25.3% slump to reach $197.9 million in 1Q2020 from $264.9 million in 1Q2019. However, the non-x86 servers segment saw a 3.6% rise in revenue to reach $34.2 million in 1Q2020.
The x86 server market accounts for 85.2% of the overall server market revenue in India. The x86 server market is largely comprises of the professional services and telecommunications segments, followed by banking and manufacturing verticals.
Large deals were witnessed from telecommunication vendors, nationalised banks, digital wallets companies, global high-tech semiconductor manufacturing companies, and various state government departments during 1Q2020.
The decline in x86 server market revenue was mainly because of a conservative approach in lack of spending from global hyperscalers and the deals got spill over into the next quarter. Besides, the restriction of movements of goods amidst the COVID-19 pandemic caused delivery constraints with customers waiting to materialize their previous orders before placing newer ones.
Given this scenario, IDC expect the server market to decline further in 2Q2020 with continuing impact of COVID-19 on the financial and operational balance of the industries. Recovery is expected to be observed in 2H2020, owing to spend coming from federal government agencies, bank refresh, and network modernization projects from telecommunication vendors.
From the vendors perspective in the non-x86 server market revenue, IBM with 74.1% of revenue share continues to lead the market in 1Q2020 with a $25.4 million revenue.
The adoption of IBM’s server offerings is growing primarily across banks for their core banking and internet banking workloads. As a result, 79.4% of its revenue was seen coming from banks, followed by manufacturing. Oracle came at second position followed by Hewlett Packard Enterprise (HPE) with a revenue share of 14.6% and 11.3% respectively.
Vendor Highlights:
In 1Q2020, Dell Technologies emerged as the top vendor in the x86 server market in India with a 36% revenue share and a $71.3 million in revenue. For Dell Technologies the key wins came from professional services, banks, high-tech semiconductor manufacturing companies and telecommunication vendors.
Hewlett Packard Enterprise (HPE) came at second spot with a 23.1% revenue share and a 45,7 million revenue. HPE gained from large orders from telecommunication vendors, professional services vertical, manufacturing and federal government departments.
While Cisco took the third spot with an 8.8% revenue share and $17.4 million in revenue followed by Lenovo with a 6.3% revenue market share with $12.4 million in revenue.
“The market sentiment is pessimistic, and we anticipate a sharp decline for the server market revenue in 2Q2020,” said said Harshal Udatewar, Market Analyst -Server, IDC India.
“As the lockdown continues to negatively impact working capital across businesses, buyers are now employing capital preservation strategies for future usage resulting in low spending on current IT requirements. In such a scenario, IDC expects the server market in 2020 to decline by 22.3% in terms of value,” added Udatewar.
IDC India Forecast
COVID-19 continues to deteriorate the health of Indian economy and its outlook. The lockdown extension is imposing severe challenges across multiple sectors such as manufacturing, IT and ITeS, personal and consumer services, media, and others, due to which server market growth in 2020 seems highly uncertain.
Enterprise spending is limited to essentials only, and projects with long completion time frames are either coming to a halt or getting deferred to a later time.
However, IDC does anticipate investments to emerge from federal bank departments for some greenfield projects, technical refreshes in 2H2020 by banks and on-going projects from telecommunication vendors.
Spending from two of the largest telecommunication vendors in the country would be primarily focused on network modernisation, VoLTE, and cloud infra projects, while banks would be towards refreshes.
At present, the x86 server market in India is expected to witness a 41.3 YoY decline in value during the period 2Q2019-2Q2020, according to the latest IDC Worldwide Quarterly Server Forecast, 1Q2020, (June 2020 Release).