Hardware Today: The 2003 Server Market Scorecard

By Ben Freeman (Send Email)
Posted Dec 22, 2003


Not surprisingly, the economic downturn of the past few years has created an environment where only the fittest survive, rewarding enterprises that do more with less and doling extinction to those that cannot adapt. In 2003, the competition intensified as a few economic bright spots began to emerge.

As the economy perked up, the competition grew stiffer. We overview what we believe were the five most contentious matches in the server hardware playing field this year.

This week, Hardware Today tabulates the score on the most competitive hardware match-ups to evolve this year, as small technology companies scrambled to survive and behemoths labored to maintain their competitive edge. And from the periphery, record volumes of viruses and spam invited themselves to the contest.

We believe the following were the top-five spars to enter the ring.

1. Modular vs. Mainframe: In 2003, the rise of modular computing hastened mainframe computing's slow migration south. According to an IDC report, smaller servers led the charge as combined server sales worldwide grew a somewhat encouraging 2 percent in the third quarter. A larger overall server unit shipment growth of 19.5 percent hints that less-expensive, smaller servers are selling. When broken down, revenue for servers priced at less than $25,000 increased 9.5 percent, while midrange server revenue grew a more modest 7 percent. Only high-end servers (i.e., those fetching $500,000 or more) decreased 14 percent. This shift, according to IDC, represents both reduced IT budgets and a preference toward smaller servers.

While we don't think the mainframe will meet the grim fate of the dodo bird any time soon, obvious 2003 trends, such as grid computing and virtualization, scream out modular computing's ascendancy loud and clear.

2. Virtualization vs. Entrenchment: EMC's recently announced acquisition of VMware further highlights the importance of virtualization as a survival mechanism in the silicon jungle. While touting an obvious more-from-less ethos, virtualization also espouses a more-from-slightly-more philosophy.

An example of this trend occurred at AIG. According to VMware vice president of marketing Mike Mullany, AIG achieved a 20 to 1 server reduction when it migrated from 2-way servers running at 5 percent or lower utilization to VMware-enabled 4-way servers running at 60 percent to 80 percent utilization. While 8-way or higher virtualized configurations exist, they remain rare in such situations. "Most customers," Mullany says, "are seeing that the 4-way is the best balance between fewer servers and best price performance."

Currently, the strongest competition for virtualization products may be the entrenched, homespun virtualization methods. According to Mullany, companies with "cobbled together" methods to maximize server output may be less likely to purchase virtualization solutions. Homebrewed techniques (e.g., running multiple compatibility-tested applications on the same servers and deploying in-house management tools) while useful and cost-effective in the short term, may result in entrenchment and can obstruct migration as new technologies become available. With virtualization software, options for more flexible deployments abound, and the lack of development requirements portend clearer future upgrade paths.

3. Blade vs. Blade: With server blade sales on the upswing, Team Modular was victorious in the blades market as well. It is not difficult to see blades soon becoming a standard part of mainstream enterprises' upgrade paths. IDC reports that in the third quarter alone, 50,000 server blades were purchased, and more than 120,000 were purchased year-to-date. Blade sales increased in 2003 as IBM, Sun, and Dell joined HP on the playing field, circling in on blade-only vendors like RLX and Egenera. However, at this point, it is unclear if the blade market's biggest competitor to more explosive growth is itself.

Although the lack of blade standards has kept white box vendors off the field, it has also resulted in prices that are prohibitively high, and it prevents true interoperability between different blade brands. A recent Gartner report suggests several other factors that have kept blade sales at a "niche market" level. Denser blades, while overall generating less heat and using less power then rack servers, may nevertheless consume more power and generate more heat per square foot, requiring heat dissipation issues to be addressed. Gartner also cites price premiums on small volume purchases of blades compared to their standard rack-mounted counterparts as a factor possibly prohibiting enterprises from testing blades; in some cases, it may be necessary to buy eight to 10 blades to see a cost improvement compared rack servers. Despite these shortcomings, however, blade sales have slowly and steadily increased since blades were introduced in 2000.

4. Intel vs. SPARC: An increase in blade sales has benefited Intel in its battle against SPARC. According to IDC, x86 server sales, which include Intel- and AMD-based servers, were up 8.3 percent in the third quarter, while x86 server unit shipments swelled 21.4 percent. Intel's introduction of its Montecito line in November should further bolster their efforts here.

Meanwhile, in the SPARC dugout, Sun showed a 9.3 percent reduction in 2003 market growth overall. Its Unix server sales were down 10.1 percent. Unit shipments, however, grew 17.4 percent, reflecting Sun's focus on lower-cost computing, yet another indicator of modularity's increased importance in the server room.

5. Viruses and Spam vs. The Enterprise: Arguably, the stiffest competition in server rooms this year came neither in the form of hardware nor as something enterprises sought. Viruses and spam put a strain on already-stretched hardware resources, compromised communications, and dented corporate pocketbooks.

Chris Belthoff, senior analyst at Sophos, described 2003 as "the worst year on record for virus activity," citing the fiscally devastating one-two punch of the Blaster virus and Sobig-F worm in August. These virulent pests joined the Slammer, BugBear-B, and Sobig variants among other 2003 inaugurees into Sophos' database of 86,000 known viruses. Like a Monty Python sketch gone badly awry, spam also swelled to record levels this year. As of November 2003, 56 percent of the 77 billion messages Brightmail processed were definable as spam, according to spokesperson John Reseburg. While spam certainly annoys users and may defraud them in the aim of "helping to wire $30 million" from an oppressed country, it also wastes valuable CPU resources, bandwidth, and storage space, thus unnecessarily taxing hardware.

When planning server changes, be sure to keep virus and spam battle plans current. Even best the hardware utilization maximization rates in the world are futile if such parasites are successful in their lobby for CPU time.

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