) maintained its top position in the server market in the second
quarter of 2014 as well, per IDC's Worldwide Quarterly Server
Tracker. As a matter of fact, H-P expanded its market share to
25.4% from 25% in the year-ago period and revenues increased 4% on
a year-over-year basis.
Notably, in the second quarter, revenues from the server market
increased 2.5% year over year to $12.6 billion. IDC expects demand
for servers to be driven by public cloud deployments going
Per IDC's estimates, International Business Machines (
) and Dell, the other two top-three vendors, not only lost market
share but also witnessed revenue declines during the period. IBM's
market share was down from 27% to 23.6%, while revenues declined
10.2% year over year primarily due to lower demand for its
Power-based systems. Dell's market share was down from 18.2% to
16.6% with revenues declining 6.5% due to the realignment of its
selling strategy of its PowerEdge servers.
Meanwhile, Cisco (
) and Oracle (
) witnessed an increase in market share as well as in revenues and
together secured the fourth position. Cisco's market share
increased from 4.4% to 5.8% and revenues increased 35.4% year over
year, due to strength in its UCS systems. Oracle's revenues
increased 3.9% from the year-ago quarter, while market share
increased from 5.8% to 5.9%.
Now, coming back to H-P, the company's server revenues were
positively impacted by higher revenues from x86-based ProLiant
servers which more than offset the continued decline in revenues
from its Itanium-based Integrity server. H-P retained its leading
position in x86 servers and Blade servers commanding 29.6% and
42.2% share of second-quarter 2014 revenues, respectively.
H-P is taking aggressive steps to increase its share in the x86
server segment yielded results, since IBM sold its x86 server
business to Lenovo. H-P is also reported to be tapping into the
current IBM customers. The company is utilizing this opportunity to
strengthen its footing in the server market which could generate
incremental revenues, going forward.
Moreover, H-P's traction in the cloud, security and Big Data
segments are expected to be the growth catalysts, going forward. We
believe that the company's strategic focus on the software business
will help it to diversify beyond the PCs. Nonetheless,
macroeconomic challenges and tepid IT spending remain the near-term
Currently, H-P has a Zacks Rank #3 (Hold).
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