The overall server market in India has witnessed a 14.2% quarter-on-quarter increase in terms of revenue to reach ₹1,465.97 crore ($215.6 million) in the first quarter of 2017 as against ₹1,283.74 crore ($188.8 million) in Q4 2016, according to market research firm IDC.

The x86 server market accounted for 90.7% of the overall server revenue during Q1 2017 with growth being majorly driven by spending of public cloud service providers for their data centres.

The public cloud uptake and digital transformation across banking and government verticals are driving the server market in India. The x86 server market in terms of revenue witnessed a year-over-year (YoY) growth of 3.9% to reach ₹1,329.98 crore ($195.6 million) in Q1 2017 up from ₹1,279.66 crore ($188.2 million) during Q1 2016.

The enterprise migration to cloud and role of emerging technologies such as artificial intelligence, IoT and analytics are attracting the global public cloud providers to expand their footprints in India. Density optimised servers are mostly preferred for cloud workloads which are gaining traction, accounting for QoQ growth of 413.6% in terms of revenue for Q1 2017 over previous quarter.

The non x86 server market declined by 22.3% YoY in terms of revenue to reach ₹135.99 crore ($20 million) in Q1 2017. In terms of revenue, IBM led the market, accounting for 50% of market share, while HPE remained the only vendor who grew its share to 17.8% during Q1 2017. In non x86 server market banking industry on its own contribute for 57.3% of the revenue, followed by manufacturing and professional services verticals.

"Professional services, telecommunications and banking remained the top three verticals, accounting for about 70% of the overall market. The market is likely to be driven by Digital initiatives, SAP HANA implementations and cloud workloads in the coming quarters," said Rishu Sharma, associate manager for Enterprise Infrastructure, IDC.

IDC_server-India (cr) Figure 1: Major vendors (Source: IDC)

In India x86 market, HPE increased its market share from 37.8% in Q4 2016 to 40.3% in Q1 2017 in terms of revenue, followed by Dell with a market share of 20.5% during Q1 2017.Though the market increased YoY in terms of revenue most of the major vendors failed to maintain their market share, while ODMs have been successful in growing their market share from 0.3% in Q1 2016 to 14.5% in Q1 2017 and Cisco increased its market share to 8.9% in Q1 2017, mainly driven by its blade revenue.

"ODMs have disrupted the India server market during Q1 2017 by strategically positioning themselves in public cloud and third party data centre space and are challenging the established vendors with their attractive pricing," said Harshal Udatewar, server market analyst, IDC India.