RealTime IT News

How May They Server You?

If current trends hold up, server growth will be the best its been in a few years thanks to a 5-percent worldwide increase in enterprise spending this year. Led by Linux- and Windows-based servers, the market is enjoying the comforts of a $53 billion boost in 2004, according to IDC.

Analysts for the Framingham, Mass.-based research firm said they expect the rekindling of server sales from last year will continue in 2004, ballooning to a $60.8 billion market opportunity by 2008. This is a compound annual growth rate (CAGR) of 3.8 percent over the next five years.

The news is incredibly positive for server vendors IBM , HP , Sun Microsystems , Dell and others, all of whom saw sales plummet after the dot-com bubble burst in 2000.

The economic downturn prompted demand for commodity hardware to shrivel up, as cost-conscious IT managers held off on padding their data centers with newer, improved computing machines.

But now, thanks to the surging popularity and acceptance of Linux in the enterprise, as well as the continued success of Windows, server vendors have a reason to feel encouraged.

"There continues to be very strong growth in the x86 industry standard server market -- particularly for Windows and Linux-based solutions," said Mark Melenovsky, research director of Global Enterprise Server Solutions at IDC, in a public statement. The analyst said he anticipates great growth for single systems in small offices to multi-node clusters in data centers.

IDC analysts said Linux servers will claim nearly a third, or 29 percent of all server unit shipments by 2008, which is good for about $9.7 billion in revenues. This bodes well for companies like IBM and HP who have invested billions in expanding its Linux businesses.

The growth of Linux from a research project to a full-blown enterprise product also comes in spite of the struggle for rights to the open source operating system, in which SCO Group and IBM are duking it out over trade secrets.

Meanwhile, Windows-based servers are expected to snare 60 percent of all server shipments in 2008, representing the largest server operating environment in terms of revenues with $22.7 billion.

IDC expects Windows and Linux servers to command more than 50 percent of server market sales in 2008, which is a strong increase from their combined 37 percent share in 2003.

But customers are no longer dumping thousands or millions of dollars in expressly monolithic, or so-called "big iron" servers, according to IDC. Blade servers are expected to represent 29 percent of server unit shipments and $9 billion by 2008.

Vendors such as IBM, HP, Dell and Sun find value in blade servers as an alternative form factor for customers looking to bundle several one- to two-processor machines for grid computing. Software makers, such as Oracle , are betting on grid systems to eventually lead them to success.

IDC said the blade or modular computing market will "bring dramatic changes to the server landscape while creating new areas of demand for server management, virtualization, network equipment and clustering."

Regionally, the research firm said the United States will continue to hold the greatest share of the worldwide server market through 2008, followed by Western Europe and Asia/Pacific. However, IDC expects the strongest growth will come from Central and Eastern Europe and the Asia/Pacific region, both of which are expected to witness a CAGR in excess of 6.5 percent.