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Future Looks Bleak For RISC/Itanium Unix Servers

Server revenue figures from both IDC and Gartner for the fourth quarter and for calendar year 2011 indicate a continuing decline in the sales in the RISC/Itanium Unix segment, as well as continuing challenges in that market segment as compared with commodity servers using processors from Intel. However, though there is thought to be increasing interest in servers based on the ARM processor, that is not what is driving the loss in market share in the RISC segment, according to an analyst who follows that market segment.

While IBM grew Unix server revenue 2.5% year over year and gained 7.9 points of Unix server market share when compared with the fourth quarter of 2010, Unix servers experienced a revenue decline of 10.7% year over year to $3.4 billion, representing 24.2% of quarterly server revenue. Jean Bozman, IDC’s research VP, Enterprise Platforms Group, says the Unix server market has not returned to prerecession levels due to a new set of market dynamics, adding that fourth-quarter results showed that Unix servers generated 24% of quarterly revenue share and 21.8% of 2011 annual server revenue share, compared with 31.6% market share in the fourth quarter of 2008 and 30% of annual revenue share in calendar year 2008. She also blames competition among the top three Unix server vendors--IBM, HP and Oracle--and erosion of overall Unix server market share due to platform migration.

In the fourth quarter of last year, RISC/Itanium Unix systems declined 3.9%, and that market segment is increasingly facing longer-term challenges as many users look at alternative platforms, says research director Adrian O'Connell.

However, sales of RISC/Unix servers are decreasing not because of increased ARM server sales, but because of a change in enterprise server strategies that has been going on for several years, says Kurt Marko, an analyst for InformationWeek and InformationWeek Reports. "The enterprise was ditching the RISC platforms for x86--that’s why sales are dropping," he says. "Those numbers are where they are because enterprises are not buying proprietary hardware they way they used to. Intel hardware has closed the performance gap that used to exist a decade ago."

For some applications, such as high-end databases, RISC processors make sense, Marko continues, but they’re facing the classic "innovator's dilemma" problem, where a disruptive, newer technology comes up underneath an existing technology and eats away at its market, forcing the older technology into higher-end niches. In fact, ARM--the sales of which at this point are minuscule compared with those of RISC--could end up doing the same thing to x86 processors that x86 processors did to RISC, he says.

"They are scaling up processors [to 64-bit] that are low power that have been traditionally designed for mobile devices [at 32-bit]," he says. Organizations can just add processing nodes like bricks in a wall, where the primary concern is going to be packing in as many as possible onto a rack without melting the rack, he says. "Power and cooling become a big consideration."

Learn more about Fundamentals: ARMed and Dangerous? by subscribing to Network Computing Pro Reports (free, registration required).

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