Virtualization Drives Up Server Prices
Server shipments and the average selling price of servers soared in the third quarter of 2010. The latest numbers from Gartner paint a rosy picture for server vendors, with global shipments up 14.2 percent year-over-year while revenues were up 15.3 percent. IDC was a shade more Grinch-like, reporting a 13.2 percent revenue increase, to $11.8 billion, on a 13.1 percent increase in shipments. The only gloom in the report was related to Oracle, as its server business (essentially Sun) lost market s
December 2, 2010
![Network Computing logo Network Computing logo](https://eu-images.contentstack.com/v3/assets/bltde8121fc52c5c8f3/blt3f3d0318f746b1c2/65a530e4187606040a1d8b8c/placeholder.png?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
Server shipments and the average selling price of servers soared in the third quarter of 2010. The latest numbers from Gartner paint a rosy picture for server vendors, with global shipments up 14.2 percent year-over-year while revenues were up 15.3 percent. IDC was a shade more Grinch-like, reporting a 13.2 percent revenue increase, to $11.8 billion, on a 13.1 percent increase in shipments. The only gloom in the report was related to Oracle, as its server business (essentially Sun) lost market share.
The market's main driver was x86-based servers, says Gartner. The revenue for this category was up 29.5 percent, on a 14.9 percent increase in unit shipments. The increase in average selling price was attributed to the need for more robust server configurations to accommodate virtualization. While RISC/Itanium Unix servers continued their downward path, with drops of 10.1 percent in shipments and 9.5 percent in vendor revenue, the "other CPU" category, mainly mainframes, grew revenues by 9.9 percent.
Gartner reports that HP nosed out IBM for top spot in revenues, $3.94 billion versus $3.71 billion, to join its shipment domination (32.6 percent over second-place Dell at 22.9 percent). Dell, Fujitsu, and Oracle held down the next three revenue spots, with the big five accounting for almost 88 percent of the total market. Oracle was the only vendor that did not benefit in this market, retreating 2.6 percent. Unlike the previous two quarters, in the third quarter rack-optimized servers (23.7 percent in shipments, 31.2 percent in revenue) outpaced blade servers (7 percent in shipments, 26 percent in revenue).
IDC's numbers showed a significant year-on-year increase in midrange servers, up 19.8 percent, but showed that demand for high-end enterprise systems remained soft, with revenue down 10.4 percent. While IDC also reported dismal results for the Unix platform, it expects the recovery to extend to Unix platforms in the fourth quarter.
IDC says the third-quarter data shows that unit shipments in the midrange Unix server segment ($25,000 to $250,000) increased year over year, as did revenue, likely the result of workload consolidation from aging Unix servers and of IT build-outs for telco, banking, and government infrastructure in fast-growing economies worldwide.Rob Enderle, principal analyst at the Enderle Group, says that the short-term future for the RISC/Itanium market will continue to be challenging. "Mainframe virtualization continues, and there is a lot of work going into putting new classes of ARM processors into this role. For the near term, x86 will have the bigger numbers, and it is unlikely we'll see that much of a resurgence on the mainframe. The ARM stuff is still years off, suggesting x86 will be where most of the action is until at least mid-decade."
A slightly more optimistic forecast is offered by Greg Richardson, of Technology Business Research. The company believes that the strong growth in the x86 market is the product of a closing performance gap between industry standard servers and proprietary servers (RISC, Itanium, Sparc, and Power).
As x86 systems become more powerful and can handle more workloads, customers are adopting these systems over proprietary systems because they paint a story of increased flexibility and scalability, particularly in virtualization. "We do believe, however, that opportunities exist for proprietary servers in the virtualization space," says Richardson. "As more workloads move to virtual environments, we expect demand for higher performance systems to increase, leading customers to build environments with proprietary and x86 servers. As a result, proprietary vendors are jockeying for position with virtualization capabilities on their systems, such as PowerVM and Oracle VM Server for SPARC."
IBM is in the midst of transitioning to the next generation of its RISC processor, POWER7, which started shipping in August. Initial response has been positive, but its System x (x86) and System z (mainframe) platforms did the heavy lifting, with revenue up 30 and 16 percent, respectively, says the company. Meanwhile Dell, No. 3 in revenues and No. 2 in shipments, just reported that its server revenue was up 20 percent year-over-year.
You May Also Like
Maximizing cloud potential: Building and operating an effective Cloud Center of Excellence (CCoE)
September 10, 2024Radical Automation of ITSM
September 19, 2024Maximizing Manufacturing Efficiency with Real-Time Production Monitoring
September 25, 2024