Healing hardware - how 2014 saw the rebound of the channel's key market, part one

In the first installment, we look at well the EMEA server market did in 2014

For some years many in the channel have sought to limit their exposure to traditional hardware markets. Anecdotal evidence - sometimes backed up by analyst data - has characterised a world in which sales are challenging, and margins even more so for resellers continuing to sell large volumes of computing hardware for both the datacentre and, particularly, the desktop.

Certainly, going into 2014, both the server and PC markets were, to varying degrees, showing signs of strain. But the year has proven to be an unexpectedly fruitful one for the hardware market in EMEA, with both personal and enterprise computing technology enjoying sales growth. But just how good has it been this year, and what can we expect from 2015?

The first quarter
In its Q1 figures, IDC claimed that EMEA server shipments had "continued along the same consistent contraction trend" for the prior three years. And, once again, shipments in the quarter posted a 3.9 per cent decline on the corresponding period in 2013.

But the market enjoyed a rebound in revenue, which increased 1.5 per cent to $2.86bn (£1.89bn). Market leader HP led the way with 5.7 per cent turnover growth, while Fujitsu was the star performer, increasing sales by 14.2 per cent. Western Europe enjoyed an annual rise in revenue for the first time in two and half years, posting a spike of about two per cent.

Shipments - 537,800 - down 3.9 per cent YoY

Revenue - $2.9bn - up 1.5 per cent YoY

The second quarter
The year's second quarter marked an even bigger bounce back in fortunes, with the EMEA server space seeing its first year-on-year increase in shipments in 10 quarters, according to IDC. The number of units shipped rose 2.5 per cent annually to more than 550,000.

Revenue enjoyed an even bigger boost, growing 3.6 per cent to a little more than $3bn. The western Europe region carried on where it left off in the previous quarter, this time increasing its year-on-year revenue growth rate to six per cent, with overall turnover coming in at $2.4bn.

Shipments - 550,000 - up 2.5 per cent YoY

Revenue - $3.2bn - up 3.6 per cent YoY

The third quarter
The year's third quarter brought yet more good news for the EMEA datacentre hardware market, with revenues growing 5.8 per cent annually to $2.99bn, and the number of units shipped growing 2.1 per cent to 541,000.

IDC figures reveal that Cisco grew its revenue more than 30 per cent to stroll into the top five, taking fourth spot, behind only leader HP, third-placed Dell, and IBM - which posted the heaviest in a series of declines during Q3, a trend that will surely continue in light of the sale of its x86 business to Lenovo.

Shipments - 541,000 - up 2.1 per cent YoY

Revenue - $2.995bn - up 5.8 per cent YoY

Where next?
Looking ahead, as big data and analytics becomes more and more prevalent, the demand for the enterprise hardware to support it will surely remain strong. The need for datacentres to provide cloud and hosting services is also only going to increase in the coming months and years.

In IDC's third-quarter numbers, EMEA Enterprise Server Group research manager Andreas Olah revealed that the core western European market had seen "a weak performance" in the market for blade and density-optimised servers. But the demand for hardware to support cloud and big data needs had steered the overall market to growth, he explained.

"While increasing volumes of ODM shipments were driven by new cloud service provider datacentres in Germany and Finland, overall server revenue grew more significantly than units in western Europe as the shift towards higher-end models with mission-critical and in-memory processing capabilities continues," said Olah. "Substantial demand is coming from new workloads in the big data analytics space, which is also driven by advances in network virtualisation and the internet of things."

Look out tomorrow for our look back at how the EMEA PC market defied the odds to return to growth in 2014, after a dreadful couple of years.