The global computer server market continues to be dogged by a combination of low spending, easy access to virtual machines, and the need for reinvigorated value propositions, Gartner Inc. said in its latest report.

Global server revenues tumbled by 5.8 percent in the third quarter of 2016 compared to one year ago, while shipments also fell by 2.6 percent, Gartner said.

Cisco Systems Inc. was the only one of the top five vendors in the server market to actually increase its revenues in Q3, Gartner said. Meanwhile, only Huawei Technologies Co. Ltd and Inspur Electronics Co. Ltd. saw their total shipments grow. As for Hewlett Packard Enterprise Co., Dell Technologies Inc. and Lenovo Group Ltd., they saw declines in both revenues and shipments in what was a very tough quarter all round.

“The server market was impacted during the third quarter of 2016 by generally conservative spending plans globally,” explained Jeffrey Hewitt, research vice president at Gartner. “This was compounded by the ability of end users to leverage additional virtual machines on existing x86 servers (without new hardware) to meet their server application needs. Server providers will need to reinvigorate and improve their value propositions to help end users justify server hardware replacements and growth, if they hope to drive the market back into a positive state.”

With the exception of Eastern Europe, which saw growth of 0.9 percent, every region saw a decline in total shipments. As for revenues, Japan saw growth of 1.3 percent while all other regions saw declines.

The most important segment of the market is x86 servers, and these saw a decline of 2.3 percent in shipments and 1.6 percent in revenues during the third quarter. Cisco’s was the only top five vendor to see its x86 server revenues increase slightly, while the others all experienced declines. Huawei and Inspur Electronics both saw slight growth in x86 server shipments.

Despite seeing its revenues and shipments fall, HPE retained its pole position in both categories. The company saw revenues fall by 11.8 percent to $3.25 billion, while its shipments fell by 19.5 percent to 493,268 units for the quarter. Dell remains in second place with revenues of $2.27 billion and shipments of 452,383 units, while Lenovo rounds out the top three.

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