server market

Cisco Plans Bold Move Into Server Business, Enters Arena With HP And IBM

January 20, 2009 by Robin Wauters 1 Comment

According to the NY Times, Cisco Systems is planning a big push into the server market, essentially entering into competition with its historical partners HP and IBM (who declined to comment on the story).

A risky move for Cisco, but a very interesting one.

The product — a server computer equipped with sophisticated virtualization software — is a bold but risky move by Cisco into an unfamiliar, intensely competitive market that typically produces far lower profits than Cisco makes from network gear. But it reflects the company’s ambition to grow beyond its roots as the so-called plumber of the Internet to offer everything from instant messaging software to digital stereos.

As The Register points out, VMware technology is likely the foundation of the virtualization part, since Cisco still owns part of the company (about 2%). Cisco is not disclosing any specifics though, but the NY Times learned that Cisco could show off the first of its new systems as early as March.

Acquisition rumors between Cisco Systems and VMware (and even EMC in full) are sure to flare up again.

A good follow-up article was published on Forbes.

Gartner: Server Market Still Growing, Despite Virtualization

May 23, 2008 by Robin Wauters 1 Comment

Just recently, Gartner published a report showing that the server market did great during all of 2007, including the fourth quarter. Server shipments rose 11 % during the fourth quarter, while revenue rose almost 3 %.

The analyst firm has now proclaimed server sales and shipments also showed strong growth in the first quarter of this year compared to last year despite continued growth of the use of server virtualization technology. Jeffrey Hewitt, VP Research at Gartner said that certain factors are “masking” the impact of server virtualization.

“A lot of the growth in physical server sales is coming from an explosion in the use of certain applications such as Web servers, which often do not lend themselves to being virtualized. Also, server virtualization is still much more accepted in mature markets such as the US, Europe, and Australia, and less adopted in fast-growing markets such as China. Additionally, customers are not running server virtualization on old hardware. Customers are buying larger servers to host virtualization. This market is so hungry for more and more horsepower. Virtualization makes it easier to host more and faster applications.”

Gartner on Thursday said that a total of 2.3 million servers were sold in the first quarter, up about 7.6 percent over the 2.1 million shipped during the same quarter last year. Revenue growth was not as strong, however. Vendors sold $13.6 billion worth of servers during the quarter, up only 4.3 percent compared to the $13.0 billion in server sales last year, Gartner said.

HP was the world’s top server vendor during the first quarter of 2008, accounting for 30.1 percent of the total worldwide shipments. Fast growth in server shipments by Dell, which boasts a 22.7 percent market share, puts that company within striking range of the top position. Dell’s shipments grew 15.8 percent over last year compared to HP’s growth of 7.8 percent.

Worldwide RISC-based and Itanium- based server shipments slipped 8.4 percent compared to last year, with all top five vendors seeing a drop in sales. However, revenue for this class of servers grew 3.7 percent over last year, with all top five vendors seeing revenue growth except for Sun, which saw revenue drop as its Solaris Unix-based focus continues to shift more towards x86-based servers, Hewitt said.

Shipments of servers with the Linux OS grew the fastest year-over-year, up 13.9 percent compared to the 6.8 percent growth of shipments of servers with Windows, Hewitt said. However, the overall base of Linux-based servers is still only half that of Windows-based servers, so in terms of absolute numbers, Windows- based server shipments grew faster.

[Source: ChannelWeb]

IDC: Australian Server Market Reaches $1 Billion, Mainly Thanks To Virtualization

April 28, 2008 by Robin Wauters Leave a Comment

The Australian server market reached $US1.001 billion during 2007 according to analyst firm IDC, reports iTWire. Although volume only grew by 2 %, that figure masks the huge increase in spending driven by strong growth in the high-end enterprise market.

That segment grew by an amazing 30.2 % due in part to the interest in virtualisation.

“Virtualisation helped boost server revenue numbers in 2007 with richer configurations of servers being deployed to drive space, utilisation and energy efficiency,” says Matthew Oostveen, research manager of Asia/Pacific enterprise servers and workstations research at IDC.

Spending growth in the midrange enterprise and volume segments also contributed to the overall 17 % growth.

“Virtualisation was also one of the key underpinnings for the 40 percent increase in x86 blade server shipments in 2007,” said Oostveen.

Differences in market segments resulted in IBM being the number one vendor in terms of revenue (followed by HP and Dell), but IDC’s analysis by volume puts HP at the top of the list followed by Dell. Sun came in at number three for revenue, but was the only leading vendor to achieve year-on-year revenue growth, according to IDC.

[Source: VMBlog]

Intel Hearts Virtualization

April 10, 2008 by Robin Wauters Leave a Comment

In a piece on Channel Insider, Steve Dallman, Channel Chief at Intel, says he and the company’s channel partners are seeing incredible growth in the server market, despite – and even thanks to – the increasing use of virtualization technology which should help reduce the number of servers.

“You would think with virtualization that you’d see fewer servers, but that’s not happening. The need for servers and server capacity is phenomenally large,” especially from the SMB (small and midsize business) market, Dallman said. “SMBs just don’t need to consolidate server farms,” he added.

Research firm Access Markets International said in January that global SMB server spending will reach $19.8 billion in 2008, a double-digit growth over 2007. While growth in the server space is still accelerating, Dallman said without virtualization, the growth in the space might be out of control.

“All virtualization is going to do is to moderate the growth in the server space to a level that’s manageable for both vendors and partners”, he said.

[Source: Channel Insider]

Analyst Says Virtualization May Have Impact on Desktops … In 2010

March 5, 2008 by Robin Wauters Leave a Comment

Tim Luke, an analyst from investment bank Lehman Brothers, claims the impact of virtualization technology on desktops won’t be significantly felt until at least 2010 although he acknowledges its impact may already be limiting growth in the server market (then again, Gartner says it performed just fine in 2007).

As for the mainstream desktop market, Luke forecast the virtualization trend there may remain “subdued” in the near term. According to the analyst, the economic case for desktop virtualization is not as compelling and also cited user reluctance. Luke estimated about 1 % of desktops will be virtualized by 2010, and 4 % by 2012. However, Luke said that the virtualization of individual desktop applications “may see better traction in the medium term.”

[Source: CNN Money]

Gartner: Server Market Doing Fine Until Further Notice

February 22, 2008 by Robin Wauters 1 Comment

A new report from Gartner shows the server market did great during all of 2007, including the fourth quarter. Server shipments rose 11 % during the fourth quarter, while revenue rose almost 3 %. The world’s server vendors combined to ship 2.4 million boxes during the fourth quarter and brought in $ 15.5 billion for their efforts. In all of 2007, shipments rose 7 %, while revenue jumped 4 %. For the entire year, vendors moved more than 8.8 million units and generated $ 54.8 billion in revenue, according to Gartner.

The rise of virtualization and the general economic slowdown, combined with trimmed budgets at the financial services companies, has left a lot of analysists proclaiming a big slowdown and even downfall in hardware sales. But so far, the sky seems blue.

Out of the top vendors, Hewlett-Packard enjoyed the strongest fourth quarter in terms of shipments. It grew 12 % year-over-year, while Dell grew at 9 %, IBM grew at 7 % and Sun declined by 6 %. Fujitsu-Siemens also enjoyed a super quarter with 18 % growth.

Vendor	Q4 Shipments	Gain/Loss
1) HP	702,100	12%
2) Dell	499,687	8.8%
3)IBM	372,701	7.4%
4)Sun	84,778	-6.3%
5)Fujitsu/Siemens	75,882	17.9%

Almost all of the vendors saw their revenue rise during the fourth quarter. IBM stood out as the lone laggard, despite it talking an awful lot lately about how strong its server business is.

Vendor	Revenue	Gain/Loss
1) IBM	$5.3bn	-0.8%
2)HP	$4.4bn	7.6%
3)Dell	$1.6bn	4.1%
4)Sun	$1.49bn	1.0%
5)Fujitsu/Siemens	$616k	2.1%

For the full year, HP stood out with 17 % growth in shipments, leading the herd. Sun was the biggest loser, dropping 8.3 %. In revenue, Dell was the main gainer, showing sales growth of 13.2 %. HP notched 9 % growth as well, while the rest of the vendors were in the low single digits.

Everyone moved a ton of x86 boxes and benefited from double-digit growth in terms of shipments. HP, Fujistu-Siemens and Sun had double-digit revenue growth as well, while Dell came in at 4 % and IBM hit 7 % growth.”Blade servers continue to be a high-growth segment with a revenue increase of 44.5 % and a shipment increase of 19.9 % for the year,” Gartner said. “HP was the 2007 leader with blades at a 41.7 % shipment share, with IBM being in second place at 30.9 %. These two vendors continued to dominate this form factor and totaled almost 78 % of the worldwide blade revenue share for 2007.”

[Source and tables: The Register]