If you have wondered why Lenovo has cut jobs twice in its RTP-based x86 server business this year, some proof can be found in the latest global server sales statistics from IDC. New data from Gartner is similar. Yes, Lenovo revenues and share jumped tremendously after buying IBM’s x86 business last year, but the growth didn’t match the revenues and share IBM shed.

Plus, there’s good news for Cisco.

The IDC report does not break out x86 business, but according to a recent estimate from research firm Gartner and cited by analysts at Stiffel, Lenovo took a big hit in the quarter.

“Gartner estimates 2Q15 x86 server shipments increased 8% yr/yr (+1% seq.), driven by cloud-related growth; China ship +26% yr/yr. HP shipments declined 4% yr/yr (+3% seq.), while Lenovo + IBM System x saw its market share decline to 7.9% vs. 10.5% in the year-ago quarter,” the Stiffel report notes.

“IBM + Lenovo shipments are estimated to have declined approximately 19% y/y in the June 2015 quarter,” the research note points out later.

According to IDC data released late Tuesday, Lenovo’s second-quarter server revenue jumped 561 percent year-over-year to $949.2 million from $144.7 million.”

On Wednesday, Gartner released similar numbers.

However, much of that growth can be attributed to the IBM x86 deal, which cost Lenovo more than $2 billion and closed last fall.

IBM’s revenues plummeted to $1.994 billion from $2.98 billion, a decline of 33 percent.

So while IBM revenues fell by $1 billion, Lenovo revenues grew by just over $800 million.

Lenovo’s marketshare climbed to 7 percent from 1.1 percent.

However, that growth didn’t offset the nearly 10 percentage point drop of IBM’s share to 14.8 percent from 23.4 percent.

The Garner figures for both IBM and Lenovo were very similar:

  • IBM, $1.87 billion in revenue, market share 13.7 for Q2, down from $2.8 billion, 22.4 percent share
  • Lenovo $950 million, 7 percent share for Q2, up from $152M, 1.2 percent share

Yes, IBM sold off its low-margin, less-expensive x86s. And yes, IBM’s remaining servers POWER and System Z are much more expensive.

But Lenovo’s own x86 business had shown its own organic growth before the deal.

The Cisco news

The good news for Cisco is that its sales climbed to $866.7 million from $727 million, an increase of 19.3 percent, says IDC.

Gartner’s number are similar.

Cisco’s share jumped to 6.4 percent from 5.7 percent, virtually tying Lenovo for fourth place behind HP, Dell and IBM.

Overall, server sales increased 6.1 percent year-over-year to $13.5 billion.

“The recent growth trend in the server market is confirmation of the larger IT investment taking place, despite dramatic change occurring in system software thanks to open source projects such as Docker and OpenStack,” said Al Gillen, Program Vice President, Servers and System Software of IDC, in a statement. “While we do anticipate an impact on product mix and potentially on volumes, it is too early in the adoption cycle for these new software products to have a material impact on servers today. In the meantime, the market demonstrated healthy revenue and shipment growth this quarter.”

Here are IDC’s comments about each vendor:

  • HP captured worldwide market share of 25.4% in 2Q15 on 7.7% year-over-year revenue growth to $3.4 billion. HP’s revenue growth was driven primarily by strong demand for its density-optimized servers, which grew 118.7% year over year, and its rack-optimized servers, which grew at a more modest 10.5% year over year but still managed to contribute a larger portion to HP’s overall revenue growth.
  • Dell showed year-over-year growth of 5.9% and its nearly $2.4 billion of revenue placed the company in the number 2 position with 17.5% market share this quarter. Dell benefited from revenue growth in its blade and rack-optimized products. Dell’s blade server revenue grew faster than that of any of the top 5 vendors at 38.7%, discounting Lenovo’s acquisition of IBM’s x86 server business.
  • IBM retained its number 3 position following its x86 divestiture with $2.0 billion in revenue and 14.8% market share. IBM’s revenues are now associated with its POWER and System Z product lines.
  • Lenovo and Cisco finished the quarter in a statistical tie* for the number 4 position. Lenovo captured 7.0% worldwide market share with $949 million in 2Q15 revenues. Cisco was close behind with $867 million in revenue and 6.4% revenue market share. Cisco’s year-over-year growth of 19.3% was considerably above average for the industry and suggests the company is not done capturing incremental market share in the server market. Cisco’s blade business also continued to grow well, with Cisco’s blade revenue second only to HP in 2Q15.

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