Cisco UCS Market Share – Q1 2011

So, I wish I could say that I knew I was supposed to join Cisco because I saw it in a vision on my morning toast. That would have been really cool – and I could have gotten on the news or started my own blog or something. But it didn’t happen that way. However, coming to Cisco to join them in their “new business venture” was the clearest professional decision that I have ever made. It was as if something was pulling me here that I couldn’t stop. And I’ve never regretted coming here to join a team of 12 technical professionals that were vowing to change the world. In these past 2 years, I’ve worked harder than I knew was possible. But the payoff for all this work is now surfacing….

It started on May 24th 2011 around 8 PM EDT when IDC’s tightly enforced embargo came to end and we could begin talking about our blade market share numbers (and they are quite staggering). The official report is here. The back drop is that we began shipping Cisco UCS in July 2009 and have been ramping with solid momentum since that time. Our customer count is increasing substantially each quarter (currently at 5400) and at last check our run rate has reached $900M. We obviously expect to exceed $1B this year. That makes all of us pretty happy around here, for a business that has only been shipping product for 22 months.

The official IDC report referenced above covers “Worldwide Server Revenue Market Share” not just blades, and more specifically, not just x86 blades. But the blade data is clear nonetheless. Since a picture is worth a thousand words, let’s take a pictorial look at the current state of the blade landscape:

Worldwide x86 Blade Server Marketshare Snapshot*

This chart is quite telling. Not only did the adoption of UCS begin immediately, it has accelerated drastically since 2010 and hasn’t slowed. It’s a major contrast if you compare the growth of UCS with the fall of HP Bladesystem. It’s also clear that Cisco UCS is tremendously outpacing the rest of the x86 blade server market. There are years of innovation in UCS and customer demand is clear proof that we’re solving real business problems. It also doesn’t hurt that we’ve set over 40 record-breaking benchmarks along the way.

If we zoom in on the worldwide numbers to look at the USA, it gets more interesting. See below:

 

X86 Blade Server Market Share Q1 2011*

Sure, it’s close, but Cisco is a full point ahead of IBM in the USA with 19.7% market share. And we’re not done. There’s an 800 pound gorilla still ahead of us and we’re full speed ahead. Let me take a second to get ahead of the FUD. Our competition will say, “Cisco only holds 1.6% of the worldwide server market”. This data point is covered in the IDC report as well, but don’t let the FUD confuse you. The change in terminology is subtle but significant. When IDC says “Worldwide Server Market” they are including server types that Cisco is not currently competing in (traditional RISC, Itanium, IBM Power, etc). Cisco is obviously excelling in x86 blade servers today. This is the segment predicted by IDC to be the fastest growing of the overall x86 server market. And one more piece of FUD that is likely to come out…”No wonder Cisco has such high numbers, they’re giving all of the units away”. This is clearly false because the IDC report is based on factory revenue and not units.

Remember that you’re looking at CYQ1 numbers – combine that with the announcements we made at our last earnings call and you can begin to see a trend building. If you’re a current UCS customer, Thank You. We obviously would not be producing the results above without you. Lastly, if you’re not looking at Cisco UCS today, what’s holding you back? Feel free to comment below and let me know what business problems we aren’t tackling for you. We’re certainly interested.

Thanks for stopping by!

-Jeff

 

* Source:  IDC Worldwide Quarterly Server Tracker, Q1 2011, May 2011

 

13 thoughts on “Cisco UCS Market Share – Q1 2011

  1. Let me be curmudgeonly and point out the while UCS is up 10% off a low base, Network World is reporting a 10% drop in router and switch sales (with HP up 20% or so).

    You could take the view that HPN has more to gain in networking than they have to lose in server sales because of tight profit margins in servers – which Cisco is highly sensitive to.

    It’s not all roses.

    greg

    • where did you see such report? Cisco’s latest MS figures for routing were positive, and for switching they are positive as well in terms of market share, even if overall revenue has dropped. Certainly, I’ve seen no report showing HP up 20% in Networking … not even close.

    • Greg,

      Thanks for your comments. I guess I would say that there are a lot more challenges that come with buying a business (and it’s assumed market share) than with organically creating a one. I like the latter myself.

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  3. Great write up, Jeff. One of the Dell guys, Mike Roberts, made a comment on my write up at http://bladesmadesimple.com/2011/05/q1-2011-idc-worldwide-server-market-shows-blade-server-leader-as/ that

    “the way each company reports revenue associated with various elements is different. Cisco reports FEX and 6100 as blade revenue, Dell doesnt include blade IO switches (not sure about HP/IBM). Generally people think of market share in terms of units and by that measurement, Cisco is a distant 4th in WW share (17.5K vs. 27K for Dell). “

    What are your thoughts about this comment?

    • Kevin,

      I saw that on your blog and posted some comments to the author. It sounds as though Dell’s argument is with IDC and not Cisco. If they are unhappy with how IDC estimates market share, they should speak with IDC about it directly. If they really have a case, they’ll know pretty quickly (and the reverse is true as well).

  4. Hi Jeff,

    The revenue share that you mention, does that include Nexus revenue or is this the server revenue only?
    To my knowledge, the UCS solution requires a Nexus platform so it could be that the revenues that are mentioned include the Nexus sales. This would imply that the figures that are mentioned is not pure server revenue. Would be good to know this.

    Thanx,

    Dik

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