Virtualization's Success Hampers Server Sales

By Andy Patrizio (Send Email)
Posted Mar 22, 2007

IDC Wednesday revised its forecast in terms of both server dollar and unit sales in the coming years. It attributes the down shift to the increasing popularity of virtualization and more powerful servers. In both cases, one server can accomplish what previously took several.

IDC revised its server forecast in terms of both dollar and unit sales. With virtualization and more powerful servers, a single server can accomplish what previously took several.

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IDC already reported unit sales slid in 2006, while dollar sales are grew, an indication that fewer but more powerful machines are being sold. Instead of a 61 percent increase in server shipments by 2010, IDC now expects server sales will grow by 39 percent.

In projecting this trend out a few years, the research firm had to revise its server sales projections downward. Between now and 2010, IDC sees the x86-based server market dollars shrinking by 9 percent, from $36 billion to $33 billion, and actual unit sales declining 18 percent, from 10.5 million servers to 8.7 million servers.

This is due to what said Michelle Bailey, research vice president for IDC's Enterprise Platforms and Datacenter Trends division, called a "perfect storm" of virtualization and multi-core processors.

"On its own, multi-core wouldn't have been that interesting," she told "It probably would have been just another speed bump. It's the addition of virtualization that lets you take advantage of multi-core much more quickly."

Virtualization lets you run multiple single-threaded apps and get the benefits of multi-core technology without having to rewrite applications to be multithreaded. So a single machine with a dozen or more virtual environments can run the applications in a way a single-core system cannot.

"It allows you to fully exploit an unutilized processor. Virtualization is what we think of as the killer app for multi-core. It lets customers take advantage of multi-core early without having to re-architect for it," said Bailey.

IDC estimates that the number of virtual servers will rise to more than 1.7 million physical servers by 2010, resulting in 7.9 million logical servers. Virtualized servers will represent 14.6 percent of all physical servers in 2010 compared to just 4.5 percent in 2005.

This means customers are growing more confident in the uptime reliability of x86-based hardware. While they haven't approached mainframes in reliability, x86 systems are a lot better than in previous years, and come with better configuration and management tools.

A virtualized server going down could have far greater impact than a single application server going down, but Bailey said IT is not as concerned about that. "I would say customer perception around putting too many eggs in one basket has changed. A virtual environment is no less available than a single environment," she said.

However, there won't be a great spillover benefit when it comes to power and cooling issues, a growing headache for IT. While Bailey sees the potential for server consolidation, she expects that virtualization will more likely extend the lifespan of a server, thus keeping more machines deployed, so there won't be a thinning of the herd. Worldwide, power and cooling cost IS organizations $30 billion in 2006, and that will hit $45 billion by 2010.

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