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.

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