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Supply shortages continue to blight EMEA-wide server market, Gartner data shows

Server shipments across EMEA have returned to growth, but supply shortages of key components are continuing to inflate revenue

Server shipment growth across Europe, Middle East and Africa (EMEA) rebounded slightly during the first quarter of 2018, despite component shortages continuing to blight the sector.

According to Gartner’s quarterly analysis of the worldwide server market, shipments were up 2.7% in EMEA on last year, with a total of 517,000 units shifted during Q1. Server revenue, however, was up 32.1% on the previous year and totalled $3.7bn.

This is an improvement on the previous quarter, when server shipments were reported as being down by 7.9%, against 19.9% year-on-year growth in revenue to $4bn.

The disparity between the amount of servers shifted and the revenue these sales generated can be attributed to the ongoing component shortages, which have blighted the server market for several months now, and prompted some manufacturers to up their prices accordingly.

The supply of semiconductors, and consequently dynamic random access memory (DRAM), appears to be acutely affected, with industry watchers attributing this to the growth of hyperscale cloud datacentres and the rising demand for internet-connected devices.

Adrian O’Connell, research director at Gartner, said the EMEA market’s strong Q1 performance can be largely attributed to the component shortages, which are expect to persist into the second half of 2018, too.

“The cost of certain components is increasing due to supply shortages, and this is compounded by recent currency volatility increasing the figures for revenue when measured in US dollars,” he said. “The very modest rate of shipment growth demonstrates the effects of system pricing.”

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The revenue growth rate reported in EMEA is in keeping with how the rest of the world performed, according to Gartner’s global take on the figures, which states worldwide server revenue grew 33.4%, while shipments increased by 17.3%.

Jeffrey Hewitt, research vice-president at Gartner, said – supply shortages aside – the server market is reaping the benefits of sizeable investments from enterprise and hyperscale datacentre operators.

“Enterprises and midsize businesses are in the process of investing in their on-premises and colocation infrastructure to support server replacements and growth requirements even as they continue to invest in public cloud solutions,” he said.

Dell maintained its position as the worldwide leader of the server market, with 21.5% share, followed by HPE with 19.9%. Within EMEA, though, the positions are reversed with HPE leading the pack.

Read more on Managing servers and operating systems

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