China’s Lenovo ranked world's No 4 server supplier on strong second-quarter sales

PUBLISHED : Wednesday, 26 August, 2015, 8:01pm
UPDATED : Thursday, 21 June, 2018, 3:17pm

Chinese technology powerhouse Lenovo Group remained in a statistical tie with networking equipment giant Cisco Systems as the world's fourth-largest supplier of servers by revenue in the quarter ended June 30, industry estimates show.

The global market for enterprise servers in the second quarter grew 6.1 per cent to US$13.5 billion, technology research firm IDC reported on Wednesday. 

This was up from US$12.7 billion in the same period last year, on total shipments of 2.29 million units, it added.

READ MORE: Lenovo overtakes rival Xiaomi as top-selling Chinese smartphone brand in India

It marks the fifth consecutive quarter of year-on-year revenue growth for this market amid strong demand in the United States and countries in the Asia-Pacific, excluding Japan.

"The recent growth trend in the server market is confirmation of the larger information technology investment taking place," said Al Gillen, IDC's vice-president for servers and system software research.

Lenovo, the world's biggest supplier of personal computers, seized a worldwide server market share of 7 per cent in the second quarter on revenue of US$949.2 million. 

That marked a 556.1 per cent increase from its US$144.7 million revenue and 1.1 per cent market share a year earlier.

The solid results by Lenovo, which has operations in more than 160 countries, further validated its US$2.1 billion acquisition of IBM's commodity x86 server business last year. 

The company was also the top supplier of x86 servers in mainland China in the last quarter.

"Lenovo's server business is progressing on track three quarters after the integration [of IBM's x86 operation], with continued improvement in revenue and margins," Alberto Moel, a senior analyst at Bernstein Research, said in a report Wednesday.

Under a sweeping corporate restructuring plan announced about two weeks ago, Lenovo has started integrating the manufacturing supply chain for its personal computers and enterprise servers to bring down operating costs and boost efficiency. 

Commodity x86-standard servers are the low-cost, general-purpose enterprise computers used to run most business applications. They make up the basic hardware inside data centres.

IDC said global demand for x86 servers rose 8.2 per cent year-on-year in the second quarter to US$10.8 billion. 

That was driven by a 3.4 per cent year-on-year increase in shipments to 2.27 million units, which was largely led by Hewlett-Packard and Dell.

US-based Cisco tied Lenovo for fourth place after cornering a 6.4 per cent global server market share in the second quarter on revenue of US$866.7 million, up 19.3 per cent from US$726.7 million a year ago.

READ MORE: China's Lenovo to cut 3,200 jobs amid profit decline, slow sales

Lenovo and Cisco were also tied for fourth in the first quarter. IDC said it declares a statistical tie in its global server market estimates when there is less than one per cent difference in the revenue share of two or more suppliers.

HP remained the leading global server supplier in the second quarter, taking a 25.4 per cent market share on 7.7 per cent year-on-year revenue growth to US$3.4 billion.

Dell followed with a 17.5 per cent global market share on revenue of US$2.4 billion, up 5.9 per cent year-on-year.

IBM retained its number three position, following its x86 server business divestment last year, with a 14.8 per cent worldwide market share on revenue of US$2 billion. 

That was down 32.9 per cent year-on-year as its server sales are associated with its higher-margin Power mid-range servers and System Z mainframe computers.