IDC's numbers people think that the server market is now worth $12.4 billion which is disappointing after seven quarters of growth.

Shipments of servers dropped by three percent to 2.2 million units. IDC thinks that this is because of the end of the enterprise refresh cycle and a “pause” in investments in hyperscale server deployments. These investments will restart in the second half of this year with a pick up in expenditure on servers for existing data centers and the roll out of new ones.

HP Enterprise has retained its top position, with revenue of $3.3 billion and a 26.7 percent share of market revenue, after a year on-year growth of 3.5 percent. Dell and IBM retained their number two and three spots respectively, but with year-on-year declines in revenue.

Dell’s revenue dropped 1.8 percent to nearly $2.3 billion for a 18.3 percent market share, IBM saw its revenue drop by a whopping 33 percent year-on-year to $1.1 billion. Last year it saw a triple-digit growth for its z Systems mainframes. Lenovo and Cisco tied for the fourth and fifth position.

Volume system revenue increased 1.8 percent in the quarter to $9.8 billion while revenue from midrange systems increased 8.3 percent in the quarter to $1.1 billion. Demand for high-end systems had a year-over-year revenue decline of 33.4 percent to $1.4 billion, mainly on account of the surge in demand for IBM mainframes last year, IDC said.

Western Europe saw positive growth at 1.7 percent, IDC said.

Intel dominates the server processor market with a 99.2 percent share of server chips in 2015. But ARM server chips will starting gaining traction next year, according IDC.