Hewlett-Packard (HPQ) commands the top spot in the worldwide server market based on factory revenue, generating some $3.2 billion in revenue to hold 25.4 percent of the market, edging out rival IBM (IBM) and distancing itself further from Dell, according to new data from researcher IDC.

The worldwide Q2 server market grew 2.5 percent to $12.6 billion in factory revenue when compared to this time last year and shipments improved by 1.2 percent to 2.2 million units, largely driven by hyperscale data center capacity investments but constrained by server consolidation, IDC said. The researcher expects a server refresh cycle will advance the market in the coming quarters.

"The server market is experiencing the beginning of a cyclical refresh cycle as systems deployed shortly after the financial crisis are retired and replaced,” said Matt Eastwood, IDC Enterprise Platforms Group vice president and general manager.

For Q2, IBM trailed HP in server factory revenue and market share, generating $2.9 billion for 23.6 percent of the segment, dropping 10.2 percent in revenue year over year while HP gained 4 percent, based on IDC’s figures. Dell’s 16.6 percent share of the server market valued at $2 billion in factory revenue amounted to a 6.5 percent tumble from last year.

IDC pointed to flagging demand for IBM’s Power servers and Dell resetting its PowerEdge business as the culprits in both vendors’ year-over-year declines.

Based on IDC’s calculations, Oracle (ORCL) and Cisco Systems (CSCO) tied for fourth place with the former at 5.9 percent of the market and the latter coming it at 5.8 percent based on factory revenue share. Cisco's Q2 factory revenue climbed 35.4 percent when compared to the same time last year, gaining the vendor 1.4 points of market share, while Oracle’s factory revenue rose 3.9 percent year-over-year.

As for x86 servers, revenues in the sub-segment grew by 7.8 percent from last year to $9.8 billion worldwide. HP led the market in Q2 with a 29.6 percent revenue share, growing some 7.4 percent over last year. Dell held second place with a 21.2 percent share of the segment’s revenue.