Sales of servers up 3.6 percent in Q3 2012
Share on Twitter.
Get the most reliable SMTP service for your business. You wished you got it sooner!
March 14, 2013
Market research firm Gartner says that the global server hardware market is sending some mixed messages when it comes to their
place in today's modern data centers.
On one hand, overall interest in data center servers still remains fairly high, and sales continue to climb as they were in 2011.
But the eventual transition to server virtualization, cloud computing and converged systems and platforms are forcing some companies
to value server hardware a bit less and other IT infrastructure elements more.
As a result, the immediate future of servers seems a bit tenuous at the moment. Market research firm Gartner said server
shipments were up 3.6 percent in the third quarter of 2012, and businesses invested more than $12.6 billion in those new servers,
a number that is still very strong, even for a market that could accelerate its transition to virtualization going forward.
And a few factors have contributed to their ongoing popularity. Fortune 500 and even smaller companies continue to invest in
IT solutions to operate and improve their businesses. As a result, they are expanding the reach of existing applications to new
mobile devices and various social networking systems.
"Companies with legacy, heavy-duty enterprise applications and databases still buy standalone servers to run them on-- for
compatibility, performance, resilience, compliance and various control reasons," said John Abbott, chief analyst at 451 Research.
Also, new high-performance applications are constantly emerging. "Large data sets have been a recent driver in the need for
more server processing power," said Sam Barnett, directing analyst for data center and cloud at Infonetics Research.
Additionally, large organizations, governments and corporations of all sizes are collecting vast amounts of information
and then relying on high-powered hardware to register trends that improve their operations, while learning more about their
customers, suppliers and staff.
In turn, server makers are responding quickly with tailored solutions targeted at that growing market segment. For instance,
Hewlett-Packard's ProLiant SL-4500 server can handle up to 240 terabytes of raw data in a 4U server chassis and can be scaled up
to a nine-chassis configuration for a total of 2.16 petabytes of capacity.
The emergence of big data applications also underscores another business driver. "A bright spot in the server market is hyperscale
data center servers, which are seeing double-digit growth," said Abbott.
With the ongoing movement to consolidated data centers and cloud computing, information is becoming more concentrated.
Rather than spread information out at the department level, companies are centralizing it. Consequently, central data centers
are becoming bigger and need more powerful servers, while the remote data centers are smaller and getting smaller.
Gartner Research discovered that in 2010, about 2 percent of the world's largest data centers contained about 51.9 percent of
total data center floor space, and accounted for about 63.2 percent of data center hardware spending.
In 2015, those numbers are expected to rise to 58-60 percent of data center floor space and 71-72 percent of data center hardware
Then, a ripple effect is growth in x86-based servers. Technology Business Research (TBR) found their revenue rose by 13 percent in
the second quarter of 2012 compared to the second quarter of 2011.
"Linux has become a viable low-cost server operating system for large companies," added Christian Perry, senior analyst for
computing practice at TBR.
Additionally, scalability had been an issue with those servers but even that has been changing recently. The delivery of Intel's newest
Xeon chips provides companies with sufficient processing power only previously found in proprietary solutions.
But make no mistake-- there's still new market challenges as well, the most notable one being revenue from proprietary
hardware. TBR found that revenue from those products dropped by about 5.2 percent in the second quarter of 2012.
And a couple of factors also contributed to the reduction. The growth of x86 servers has often come at the expense of proprietary
solutions. Product lifecycles played a role in the decrease.
"The proprietary vendors are in the midst of delivering a new generation of processors, and users hold off from making hardware
investments during such a time period," said Perry.
Moving forward, TBR expects that product refreshes from companies like HP, IBM and Oracle will lay the foundation for improved
revenue growth in the proprietary server sector.
Computing paradigms shifts are also impacting server sales. "Companies are trying to maximize the utilization of their existing
hardware infrastructure through virtualization," said Abbott. Cloud computing offers businesses the option of outsourcing some
of the computer load and reducing the number of in-house servers.
Theoretically, it also offers businesses the ability to reduce hardware costs and simplify ongoing maintenance. However,
cloud is a broad term, and its impact has been felt in varying degrees in different market segments. On-demand server resources,
such as those Amazon offers, have proven to be popular with small and medium businesses.
But large companies have not been as willing to adopt these services because they think it compromises data integrity. "Look
at the recent service outages suffered by Amazon, Google and Microsoft-- enterprises cannot afford to have their systems down for
very long and are getting more and more impatient with service outages," said Barnett.
And let's not forget about security-- a growing concern in most system admins we've interviewed. In most cases, cloud vendors
operate multi-tenant systems, so different companies share server resources. Because information is not fully sequestered,
intrusions are highly possible in such an environment.
Because of severe limitations, large enterprises have been opting for private cloud services rather than public ones.
Vendors, such as IBM, have been trying to fill that void and could eventually convince conglomerates that public cloud services
are robust enough to trust with key applications. If that occurs (and that's a big IF), the standalone market would take another
hit. But there are still some that disagree.
Jonathan Price, CTO at Sun Hosting, a major data center operator and dedicated
server provider in Canada and the U.S. says that the sales and deployments of standalone servers should continue to be strong going forward
and that server sales at Sun Hosting have in fact been going up for the last three years, and that so far 2013's numbers are even
higher by 17 percent compared to 2012.
"We haven't really seen any serious consolidation yet when it comes to the Cloud and virtualization in any significant way,"
says Price, who's been at the company two years after it was founded in 1995. "For us, it's business as usual," he added.
Nevertheless, some unified computing systems are gaining some popularity. Rather than tinker with a variety of autonomous elements,
corporations purchase fully integrated systems, hoping that this will offer storage and network functions.
Cisco has been dabbling in that market segment lately. "But IBM and HP will gain more traction with their integrated systems moving
forward," said Perry.
The need for more computing power today continues as businesses deploy newer and bigger data applications and enhance existing
systems to accomplish more in a day's work.
Source: Gartner Market Research.
Get the most dependable SMTP server for your company. You will congratulate yourself!
Share on Twitter.
Need to know more about the cloud? Sign up for your free Cloud Hosting White Paper.