Suddenly the server market is hot again

After years of shrinking sales, the server market is suddenly hot, very hot. According to the latest figures from IDC, worldwide server shipments increased 20.7% year over year to 2.7 million units in Q1 of 2018, and revenue rose 38.6%.

This is the third consecutive quarter of double-digit growth, and it’s being driven by a number of factors. They include a marketwide enterprise refresh cycle, strong demand from cloud service providers, increased use of servers as the core building blocks for software-defined infrastructure, broad demand for newer CPUs, and growing deployments of next-generation workloads.

Average selling prices (ASP) increased during the quarter due to richer configurations and increased component costs. The increased ASPs also contributed to revenue growth. Volume server revenue grew by 40.9%, to $15.9 billion, while midrange server revenue grew 34%, to $1.7 billion, and high-end systems grew 20.1%, to $1.2 billion.

“Hyperscale growth continued to drive server volume demand in the first quarter,” said Sanjay Medvitz, senior research analyst for servers and storage at IDC in a statement. “While various OEMs are finding success in this space, ODMs remain the primary beneficiary from the quickly growing hyperscale server demand, now accounting for roughly a quarter of overall server market revenue and shipments.”

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