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IDC: Virtualization, Multicore Shake Up Server Market

Posted by Amy Larsen DeCarlo on March 21, 2007

Increasingly popular alternatives to conventional x86 architectures are having a negative impact on server shipments, according to recent IDC research findings.

Gartner has projected a worst-case scenario of x86 CAGR inching into negative territory by 2010. That may be extreme, but our testing shows the performance hit virtualization imposes is manageable in most cases. And with Xen putting pricing pressure on VMware, it seems like a perfect storm for server vendors. Lorna Garey NWC Executive Editor

Quicker-than-expected adoption of virtualization technology and multicore processor systems are resulting in a rapid drop-off of global server sales, with IDC reporting that 4.5 million fewer x86 servers will ship between 2006 and 2010 and that businesses will spend $2.4 billion less on these products.

IDC said that while server sales continue to increase, they are doing so at a much slower rate than anticipated. Earlier predictions pegged x86 server shipments to grow 61 percent between 2006 and 2010, but the market research firm has revised those estimates downward to just 39 percent for that time frame.

Virtual server shipments are expected to grow at a compound annual growth rate of 40.6 percent between 2005 and 2010, with IDC expecting that 1.7 million physical servers will be sold during this period to populate virtual environments.

However, while x86 server revenue growth rates are also slowing down, IDC said they are not doing so at the same rate as shipments because businesses are buying more "richly configured"--and thus expensive--servers with features like additional memory, I/O and disk space driving up server price tags.

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