Three key server segments — hyperscale data centers, hosted virtual desktop (HVD) workloads and extreme low-energy (ELE) servers — will offer opportunities for growth through 2015, according to Gartner, Inc. Servers represent the control points of hardware infrastructure in data centers, where workloads and applications reside, and Gartner analysts estimate that end-user spending on servers accounts for about 60 percent of overall data center hardware.
"The server market was worth $52.8 billion worldwide in 2011, and although it's mature, it will offer considerable growth opportunities in the coming years," said Kiyomi Yamada, principal research analyst at Gartner. "These opportunities will arise as demand for certain types of workloads increase and use of servers shifts to very large data centers, virtualization and energy-efficient products."
"Currently, the server market is highly competitive, and despite its size, offers only small profit margins," said Jeffrey Hewitt, research vice president at Gartner. "The prevalence of standardized (x86) platforms also makes it hard for companies to differentiate their products. In response, server providers, aiming for higher profit margins, have been making more effort to create fabric-based infrastructure and converge around integrated systems. To succeed in the server market in the next few years, companies must innovate and respond quickly to shifts in demand.
Opportunity 1: Increasing Demand for Hyperscale Data Centers Creates an Opportunity for Providers to Boost Server Shipments
Companies such as Google, Amazon and Facebook have huge data centers that serve external customers. These data centers need large numbers of servers and are called hyperscale data centers. The hyperscale/cloud data center segment already accounts for about 11 percent of server shipments and Gartner expects the segment to continue to experience strong growth, making it about 17 percent of the total x86 server market in unit terms by 2015.
"The hyperscale data center market is a big one, but limited, with only a few dozen — albeit, large — potential customers," said Ms. Yamada. "This strong, concentrated buying power inevitably means intense competition and lower margins, as well as fluctuating demand. Order schedules are more likely to be unpredictable, aligning with these companies' infrastructure build-out phases, which depend on each company's business plan. In order to be successful in this opportunity, organizations must offer custom design, manufacturing, installation and support capabilities that specifically target the segment."
Opportunity 2: Flexibility of HVDs Means More Enterprises Will Move Their Workloads, Increasing Demand for Virtualized Servers
Gartner estimates that by 2015, virtualized physical servers deployed for HVD workloads will reach about 368,000 units and will account for 16.7 percent of virtualized physical servers for all workloads. HVD workloads are among the fastest-growing server workloads. Users have taken to them quickly and in large numbers, chiefly because of the business continuity and operational efficiency they offer. Demand for HVDs will also be supported by organizations' increasing use of media tablets and use in enterprise data centers.
The main target for HVDs is large enterprises or public-sector organizations, but small or midsize businesses (SMBs) are also interested, and demand from this market segment has increased. There is also a good opportunity to offer optimized HVD solutions that cover servers, storage and networking.
Opportunity 3: Efficiency and Energy-Saving Factors Will Boost Demand for ELE Servers, Offering a New Opportunity for Providers to Diversify
This is a very new market, but Gartner estimates that ELE servers will replace about 2.4 percent of the total x86 market by 2015, as the need for power efficiency and greener IT solutions becomes more prevalent. ELE servers can be used to increase performance per watt for simple tasks such as static Web pages, streaming content, Web serving, Apache Hadoop analytics and memcached (a parallel database caching scheme), which can help to free power for conventional servers dealing with other workloads.
Although potentially lucrative, the ELE market isn't for everyone. Gartner believes that organizations need to investigate whether an investment in developing ELEs fits with their broader business goals. As very new servers, they require a large amount of R&D before products can be launched, so not only must companies be able to introduce low-power servers with small footprints, but they must also be willing to do the necessary development and testing.