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Mixed fortunes for servers: shipments down, revenue up

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According to the International Data Corporation (IDCWorldwide Quarterly Server Tracker, vendor revenue in the worldwide server market increased 4.4% year over year to $19.8 billion during the first quarter of 2019 (1Q19). Worldwide server shipments declined 5.1% year over year to just under 2.6 million units in 1Q19.

The overall server market slowed in 1Q19 after experiencing six consecutive quarters of double-digit revenue growth although pockets of robust growth remain. Volume server revenue increased by 4.2% to $16.7 billion, while midrange server revenue grew 30.2% to $2.1 billion. High-end systems contracted steeply for a second consecutive quarter, declining 24.7% year over year to $976 million.

“Demand from both enterprise buyers and hyperscale companies purchasing through ODMs was less voracious than in previous quarters; coupled with a difficult compare period from a year ago, this impacted the pace of market growth during the first quarter,” said Sebastian Lagana, research manager, Infrastructure Platforms and Technologies at IDC. “This was most evident in declining unit shipments during the quarter, although year-to-year average selling price (ASP) increases supported revenue growth for many vendors. As long as demand for richly configured servers supports further ASP growth, the market will offset slight declines in unit volume.”

Overall Server Market Standings, by Company

The number 1 position in the worldwide server market during 1Q19 was Dell Technologies with 20.2% revenue share, followed by HPE/New H3C Group, with 17.8% revenue share. Dell Technologies grew revenues 8.9% year over year while HPE/New H3C Group increased revenues 0.2%. Tied* for the number 3 position during the quarter were Inspur/Inspur Power Systems, Lenovo, and Cisco, generating 6.2%, 5.7%, and 5.3% share total server revenues, respectively. Inspur/Inspur Power Systems increased its revenue 36.4% year over year; Lenovo grew its revenue 3.9% year over year; and Cisco increased its revenue 6.9% year over year. The ODM Direct group of vendors accounted for 23.0% of total market revenue and declined -1.0% year over year to $4.55 billion.

Top 5 Companies, Worldwide Server Vendor Revenue, Market Share, and Growth, First Quarter of 2019 (Revenues are in US$ Millions)

Company  1Q19
Revenue
  1Q19
Market
Share
  1Q18
Revenue
  1Q18
Market
Share
  1Q19/1Q18
Revenue
Growth
1. Dell Technologies  $3,993.2  20.2%  $3,666.0  19.3%  8.9%
2. HPE/New H3C Groupa  $3,518.3  17.8%  $3,509.9  18.5%  0.2%
T3. Inspur/Inspur Power Systems* b  $1,219.9  6.2%  $894.4  4.7%  36.4%
T3. Lenovo*  $1,131.8  5.7%  $1,088.9  5.7%  3.9%
T3. Cisco*  $1,047.7  5.3%  $980.1  5.2%  6.9%
ODM Direct  $4,549.3  23.0%  $4,594.5  24.2%  -1.0%
Rest of Market  $4,344.3  21.9%  $4,229.8  22.3%  2.7%
Total  $19,804.5  100%  $18,963.7  100%  4.4%

Notes:

* IDC declares a statistical tie in the worldwide server market when there is a difference of one percent or less in the share of revenues or shipments among two or more vendors.

a Due to the existing joint venture between HPE and the New H3C Group, IDC will be reporting external market share on a global level for HPE and New H3C Group as “HPE/New H3C Group” starting from 2Q 2016.

b Due to the existing joint venture between IBM and Inspur, IDC will be reporting external market share on a global level for Inspur and Inspur Power Systems as “Inspur/Inspur Power Systems” starting from 3Q 2018.

Dell Technologies led the worldwide server market in terms of unit shipments, accounting for 20.0% of all units shipped during the quarter.

Top 5 Companies, Worldwide Server Unit Shipments, Market Share, and Growth, First Quarter of 2019 (Shipments are in thousands)

Company  1Q19 Unit
Shipments
  1Q19
Market
Share
  1Q18 Unit
Shipments
  1Q18
Market
Share
  1Q19/1Q18
Unit
Growth
1. Dell Technologies  517.0  20.0%  555.8  20.4%  -7.0%
2. HPE/New H3C Groupa  406.0  15.7%  455.8  16.7%  -10.9%
3. Inspur/Inspur Power Systemsb  204.9  7.9%  175.0  6.4%  17.0%
T4. Super Micro*  138.1  5.3%  156.2  5.7%  -11.6%
T4. Lenovo*  135.8  5.3%  160.7  5.9%  -15.5%
T4. Huawei*  125.5  4.9%  128.1  4.7%  -2.1%
ODM Direct  651.4  25.2%  691.1  25.4%  -5.7%
Rest of Market  403.4  15.6%  398.7  14.7%  1.2%
Total  2,582.0  100%  2,721.4  100%  -5.1%

Top Server Market Findings

On a geographic basis, Japan was the fastest growing region in 1Q19 with 9.8% year-over-year revenue growth. Asia/Pacific (excluding Japan) grew 7.4% during the quarter, while Europe, the Middle East and Africa (EMEA) grew 4.1% on aggregate. The United States grew 3.5%; Canada declined 9.6%; and Latin America contracted 14.9%. China saw its 1Q19 vendor revenues grow 11.4% year over year.

Demand for x86 servers increased 6.0% in 1Q19 to $18.5 billion in revenue. Non-x86 servers contracted -13.7% year over year to $1.3 billion.

IDC’s Server Taxonomy

IDC’s Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers, midrange servers and high-end servers. The revenue data presented in this release is stated as vendor revenue for a server system. IDC presents data in vendor revenue to determine market share position. Vendor revenue represents those dollars recognized by multi-user system and server vendors for ISS (initial server shipment) and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments.

IDC’s Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly unit shipments and revenues (both vendor revenue and value of shipments), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture.

For more information about IDC’s Worldwide Quarterly Server Tracker, please contact Lidice Fernandez at 305-351-3057 or lfernandez@idc.com.

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Spotify hits sweet spot

Streaming has shifted the music industry away from ownership and towards customer experience, writes ARTHUR GOLDSTUCK

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Last week marked the end of the beginning of the streaming music revolution. Apple announced the closing of iTunes, the 18-year-old platform that helped shift the music industry from physical to digital. At its height, in 2014, close to a billion people were using it.

However, the business model was still based on traditional ownership of music. Users either converted their physical music into digital tracks, or bought songs from iTunes. Apple founder Steve Jobs said back in 2003, when the iPod music player was launched, that consumers “don’t want to rent their music… They don’t want subscriptions”.

History proved him spectacularly wrong, and when streaming subscriptions services like Spotify and Pandora began taking off, even as iTunes hit the 800-million user mark, the company launched Apple Music in a dramatic acknowledgment that subscriptions were the future. It was also an admission that iTunes, which had also become a download service for movies and TV shows, had become top-heavy and frustrating to use.

Apple’s late arrival in the streaming world has cost it: In January this year, Apple Music reached 50-million subscribers – exactly half the number paying monthly subs to Spotify.

Spotify took South African music by storm when it launched here in March 2018, thanks to close collaboration with local artists.  It has a dedicated South African team that creates playlists for South Africans, in genres that appeal to local audiences. It also has a local ad sales team, and achieved early success with automotive brands like BMW and Mini using the platform extensively.

The company does not break down user statistics by country but, says Claudius Boller, managing director for Middle East and Africa, uptake exceeded all expectations.

“It’s been an amazing year,” he told Business Times. “Engagement in South Africa has crossed the world average. Users are extremely active, lean forward, and engage with playlists on a daily basis. We are not running many campaigns to move people from our free service to the Premium offering, but people do it right away.

“The metric we look at is how often and how long people use Spotify on average per day, and we have already seen those on premium subscriptions using Spotify much more than Facebook per day.”

The South African audience has another key differentiator, says Boller: “The market is extremely loyal. We know other music services have been in the market for many years. But when people make up their minds to try Spotify, they fall in love with it and continue to use it. The drop-off rate of people using our service is one of the lowest of all the markets in which Spotify operates.”

One of the secrets of Spotify’s success is the close relationship it builds with what it calls “the creative community” – both artists and labels.

“They are extra engaged, because of the data they are able to get. We give them a huge amount of data in a way that is very easy to digest. Through Spotify for Artists, they can see in real time how many listeners they have, their demographics, where they are listening, and where their audience is growing. If Jeremy Loops is doing very well in Australia, he can adjust where to promote his music and how to plan his touring schedule.

“We also use that data to work more closely with the creative community. We bring artists, labels and managers together for educational events so that they can get to know how to use the data. We give them practical advice, for example that they should release music on the same day on all platforms, including radio and streaming services, to maximise monetisation.”

Music entrepreneur Siya Metane agrees that audience data is one of the greatest benefits of streaming music. Better known as Slikour, founding member of the legendary hip hop group Skwatta Kamp, he now runs SlikourOnLife, an online urban music site and community with well over a million regular users. Understanding user trends has been at the heart of the growth of the platform, and he believes Spotify and its competitors add yet another dimension.

“The analytics that the streaming platforms provide give artists more insight of where their music is being consumed,” he says. “It is therefore giving the artists and their managers insight on where to invest nationally or globally. Such information has not been readily available to artists and managers before. Historically, everything was based on the physical purchase of a copy in a region – most of the time locally.”

But there is a downside, he says: “The cost of the streaming sacrifice is losing a whole R100 per album to a streaming company that pays you based on their pro rata plays on their service. Therefore only a few people can benefit. But streaming has definitely shifted the business from music alone to everything else music can influence.”

Both Vodacom and MTN have recognised the potential of streaming music to add value to their services, which are becoming increasingly commoditised. MTN late last year bought the local music streaming service Simfy Africa, and Vodacom in April this year launched its own streaming music service, called My Muze. The latter invites aspiring musicians to upload their music, with the possibility of being discovered and signed to a music label.

“The music industry has changed rapidly in recent times in that everything now lives digitally,” says Rehana Hassim, portfolio manager for music at Vodacom. “We also hope to attract new young consumers, to whom music remains one of the biggest passion points, providing various ways to engage with and consume the music they love.”

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AI reveals SA domestic abuse trends

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By Kriti Sharma, leading global voice on ethical technology and founder of AI for Good and Joanne van der Walt, Director, Sage Foundation 

Digital abuse, infidelity, and alcohol abuse are emerging as common conversation topics between victims of domestic violence in South Africa and rAInbow, an artificial intelligence-powered smart companion.

Developed with funding partner, Sage Foundation, and social justice organisation, The Soul City Institute, rAInbow allows users to ‘chat’ to a non-human over Facebook Messenger. It provides a safe space for domestic violence victims to access information about their rights, support options, and where they can find help – in friendly, simple language.

When we launched rAInbow in November last year, we didn’t expect that it would facilitate over 200,000 conversations with 7,000 users – 150,000 of those within the first three months of launch. One of the reasons we believe Artificial Intelligence (AI) can fill a gap in victim support is because many victims are uncomfortable talking to another person about their experience – due largely to social and cultural taboos, embarrassment, and shame.

The data gathered from anonymised rAInbow conversations** providesinvaluable insight into this complex issue; insight that we can use to improve our communication and prevention strategies.

Digital abuse: Behind the screens

Around 30% of rAInbow users believe it’s acceptable for their partners to check their phones and to insist on knowing who they’re talking to at all times.

Yet this constitutes a form of verbal and/or emotional abuse because abusers exploit technology and social media to monitor, control, shame, stalk, harass, and intimidate their victims. In conversations with rAInbow, many victims reveal that they don’t know what constitutes digital abuse because they can’t recognise the signs.

You could be a victim of digital abuse if your partner demands to know your passwords and who you’re talking to, reads your messages, and dictates who you can be friends with on social media.

The bottom line is, when you’re in a relationship, all communication with your partner – be it digital or face-to-face – should be respectful. You should never feel pressured into doing anything you’re uncomfortable with.

Infidelity: Is cheating really abuse?

Infidelity emerged as one of the main challenges facing rAInbow users in abusive relationships. In such cases, the cheating partner usually blames you for his/her cheating, does it intentionally to hurt you, or threatens to cheat again to control you. Infidelity is often accompanied by lying, manipulation, and blame-shifting – all recognised abusive behaviours.

Technology has exacerbated the problem. It’s now easier to access dating sites, pornography, and chat platforms, facilitating behaviour like ‘sexting’, which some people may consider infidelity.

‘Alcohol made me do it’

Alcohol and drugs are common triggers for violent episodes, with rAInbow users saying their partners were more likely to lash out at them verbally or physically after they’d been drinking. While alcohol itself doesn’t cause domestic violence, it can aggravate already tense situations.

Alcohol impairs people’s judgement and behaviour, to the point where they may lose control and become aggressive, short-tempered, and abusive. In most situations, the abusive partner will blame the alcohol for their actions and may not remember what they did or said the next day. The abused partner, however, has to live with the memories and after-effects of the abuse.

Everyone’s responsibility

In his State of the Nation Address earlier this year, President Cyril Ramaphosa said violence against women and children has reached “epidemic proportions” and that ending abuse would be made an urgent national priority. Corporates, NGOs, and ordinary citizens also have a responsibility to end the scourge.

Technology like rAInbow provides the vital information needed to start driving radical change – at policy and societal level. The conversations that rAInbow is having with users is making us think differently about how to approach this issue. It’s apparent that we need targeted, personalised education drives that help victims identify abuse and explain how and where to get help. It’s also apparent that there’s a strong need for information that can be accessed in a safe, anonymous, and non-judgemental space.

We need to use the aggregated data that’s available to us to make better decisions about action plans and strategies. Solutions like rAInbow can provide governments with the information they need to tackle abuse.

To find out how you can contribute to the rAInbow project, e-mail humans@aiforgood.co.uk.

** All conversational data is anonymised. It is used to improve rAInbow and help organisations make better decisions about where to focus their efforts to combat abuse.

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