Hardware Today: The Year That Will Be

By Drew Robb (Send Email)
Posted Jan 3, 2006

As is the nature with predictions, last year's gaze at the crystal ball proved to be both a hit and miss affair. A few of our predictions, which we'll refrain from reiterating, were way off the mark, but those concerning dual core and blades servers were dead on. We anticipate these elements continuing to exert a strong influence in 2006. This, however, may not be entirely good news for server vendors."

It's crystal ball gazing time. Analysts weigh-in on their predictions for 2006. Tops on the list: The success of multicore chips will result in consolidation in the x86 space, followed by price wars.

Server consolidation will be driven by dual- (and eventually multi-) core processors and virtualization," says John Enck, an analyst with Gartner. "Those twin demons will ultimately be responsible for slowing down volume server sales."

x86 Servers, Highs and Lows

Consolidation, of course, is hardly news. It has been an ongoing facet in IT organizations for much of the decade. But the trend toward more powerful servers occupying smaller footprints and replacing older boxes appears to be gathering steam. User enterprises now realize not every application or workload can be adequately scaled with racks of 1- or 2-way servers. Vertical scalability, as a result, will become more fashionable.

"Consolidation remains the biggest trend because downward pressure on IT budgets remains the primary driver," says Jon Collins, principal analyst for infrastructure and management at U.K.-based Quocirca. "I expect this to remain the main trend for much of 2006."

Dell, however, believes this year will see an accelerated migration from single-core to dual-core processors. This will reduce the server room footprint, as well as represent a shift in the application space.

"Consolidation remains the biggest trend because downward pressure on IT budgets remains the primary driver. I expect this to remain the main trend for much of 2006." — Jon Collins, principal analyst, Quocirca

"The greater threading capability of dual-core will increase adoption rates for highly threaded applications like virtualization," says John Fruehe, enterprise marketing manager, Dell Product Group. "In addition, the tremendous growth of blade servers in 2005 will be continued in 2006."

A need for greater data center density and the changing economics for blades is driving this. He points to Dell's PowerEdge 1855 as a good example: With a starting price of $1,372, it was the first blade offering priced at or below the cost of standard 1U rack servers.

Perhaps the biggest news in the demographics of the server marketplace was Dell racing past Sun for the No. 3 spot in the overall server rankings. Will 2006 see the company move further up the rankings? Probably not. Although it is continuing to make headway at the lower-end of the stack, it has a long ways to go at the high end.

"Dell will continue to attack the enterprise, with mixed results," says Dan Olds, principal of Gabriel Consulting Group (GCG). "I don't believe that their enterprise systems or services are at a level where Dell can seriously challenge IBM, HP, or Sun on large, complex enterprise deals."

Price Wars Inside

"Intel Inside" used to be more or less a given in x86 servers. In the past year, AMD has made huge strides with its server chips. Consequently, AMD Opteron-based systems are expected to gain plenty of ground in the coming year. Olds goes as far as to state that Opteron will capture a 25 percent to 30 percent share of the overall market.

"Intel-exclusive vendors (now a very small club) will find it increasingly difficult to win against the Opteron price/performance advantage," says Olds. "This will lead to an even bigger price war in '06."

The HP ProLiant DL385 server is but one example of a successful Opteron-based product. It took the place of the world's most popular server, the ProLiant DL380, and added an Opteron dual-core processor option as well as serial attached SCSI (SAS) hard drives. These processors allow for both 64-bit and 32-bit computing, so they can run current applications as well as upcoming 64-bit applications that no doubt will soon be prevalent. Further, the chips are more efficient than single-core versions and run at cooler temperatures. Other features of this 2U unit include up to 32 GB of memory, a built-in RAID controller, and three PCI-X expansion slots.

According to Logan Ayers, a storage specialist at CDW Government, pricing for a dual-processor, dual-core 2.2 GHz DL385 system with 4 GB of memory, 3 x 72G 10K SAS hard drives, and redundant power and fans starts at approximately $8,500.

"The SAS drives are slotted to achieve a 6.0 Gb/sec transfer rate in its second generation, which is much faster than the current parallel SCSI drives," says Ayers. "These new drives also have the ability to be full duplex, which means they can handle incoming and outgoing data simultaneously. To top it all off, the SAS drives and connectors are smaller than the current SCSI drives, so users will be able to cram more drives into small servers and make external storage extremely dense."

Mike Karp, an analyst with Enterprise Management Associates, agrees that SAS is a technology to watch in 2006. He foresees SAS hardware, in tandem with Serial ATA (SATA) will be the enabler of a wealth of tiered storage products.

"The colossal compliance demands of today's business environment are causing IT to rethink its storage strategy," says Karp. "SAS makes tiered storage possible when teamed up with SATA. In fact, SATA hardware is actually pushing the price of online archiving down to point where it is competitive with tape in many areas."

Unix Less Sun-ny?

What about the Uniux space? It appears likely that speeds and feeds will fade further from the Unix limelight over the course of the year. Instead, the driving force behind Unix sales appears to have become even more focused on operational and economic justifications. As a result, customers are increasingly valuing virtualization, workload management, and system manageability features that enable them to get more bang for their buck with higher utilization and management automation. This is one area primed to become a major battlefield in the Unix system wars.

Olds expects the market to be split roughly evenly between IBM, Sun, and HP. IBM and HP, he says, will fight it out at the high end, with Sun resurgent in the midrange and lower-end of the market with its Niagara product.

Most respondents predicted IBM as the dominant Unix vendor in five years, with Sun second, and HP third. Customers also selected HP as the vendor most likely to leave the Unix market, followed by Sun.

The outlook is not completely sunny for Sun, though. A new GCG survey of vendor preferences named IBM as the leading vendor among Unix customers, with HP as No. 2. The company queried 197 enterprise Unix customers about their experiences with and perceptions of the major system vendors on a wide range of criteria.

"We expected to see Sun Microsystems challenging for first place or at least a strong second place," says Olds. "As the largest Unix vendor in terms of number of installed systems, a third-place finish should put their management on notice that their installed base may be vulnerable."

Although the survey is a snapshot of current customer attitudes and perceptions, he believes it is also a predictor of future sales trends and momentum shifts in the industry. IBM had strong scores on system scalability and performance criteria. HP posted narrow wins in operating system and partitioning features categories. Sun, on the other hand, did not win on any of the technology criteria and finished third in 9 of 13 categories.

Most respondents predicted IBM as the dominant Unix vendor in five years, with Sun second, and HP third. Customers also selected HP as the vendor most likely to leave the Unix market, followed by Sun.

Mainframe Modesty

The final prediction for 2006 concerns the oft-neglected mainframe segment. Rumored to have died off during the '90s, mainframes continue to thrive in an enterprise setting. In fact, many of the systems from the '70s and '80s remain the core repository of their companies' business logic.

What surprises most people, though, is that modern-day mainframes are actually bigger and better than ever. Machines like the IBM zSeries offer capabilities and features unmatched by other architectures.

That said, the sector is posting far from spectacular returns. According to GCG, MIPS shipped up modestly, with revenue slightly down. As a result, IBM will probably have to look for its revenue gains elsewhere.

"I don't believe IBM has put forth a value proposition for these systems that would convince a non-mainframe customer to give it a try," says Olds. "Thus, IBM will be somewhat confined to primarily selling into their installed base — a large group of customers to be sure, but not enough to drive significant revenue gains."

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