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Monday, 08 June 2009 14:39

Server market permanently under the Cloud says EMC boss

The global server market suffered a devastating decline in the first quarter and what has been tagged as the worst slump in history may be due to a shift toward virtualisation and cloud computing rather just than the economic downturn, according to an EMC senior executive.

In recent days, reports have been pouring in from markets all over the world detailing massive year on year first quarter declines in server unit shipments in the order of 40%. In a massively exapnded IT&T market space, five years of hard won growth has been erased and server sales are back to where they were back in 2004.

While it is tempting to simply shrug off the server slump as merely an effect of the recent global financial crisis and say "things are bad all over", the server market has been harder hit than most sectors leading some analysts to ask why.

Questions have been raised as to whether there are other factors at play. After all, the past two years have witnessed a concerted push toward server consolidation from a number of differing sources, each with their own agenda.

Green IT advocates are pushing the power saving line, virtualisation vendors are pushing the server under-utilisation line, a multitude of vendors are pushing the cloud computing line in an effort to shift users off internal hardware infrastructure and IT shops are looking to cut hardware costs by getting their computing resources to do more.

"The challenge that many CIOs and IT organisations are facing is one of increasing costs to run their IT infrastructures and what this is leading to is a lot of reviewing and planning on thinking about how the data centre can be architected and operated differently moving forward," David Webster, managing director of EMC Australian and New Zealand told iTWire.

When asked whether that meant the enterprise server market is destined to continue its slippery downward slide Webster was coy, trying to tie the fate of desktops and servers together as equal victims of recent economic hard times.

"I think the reality is that in the challenging economic environment, assets such as servers and desktop computers are having their lives extended," he said.

"The refresh of those technology platforms is not occurring as quickly today as probably what it occurred 12 or 18 months ago.

"Also what is happening is that VMware around virtualisation is allowing the more efficient use of platforms."

So does that mean the use of virtualisation, of which VMware is currently the dominant market player, has negatively impacted the server hardware space?


"The reality is that the CIO today is very concerned about operational efficiency and effectiveness and is looking for ways to reduce costs. VMware has a very strong economic value proposition for a CIO and I think we're seeing fundamental changes in CIO thinking with regards to how build their environments for the future," he says.

"The overaching thing is that data centre of today is not going to be the data centre of the future."

So did Webster think that what's good for VMware, virtualisation and cloud computing is bad for the likes of Dell, IBM, Sun, HP and other server hardware makers?

"Yes I think what's going to happen is that the vision of cloud computing is one of flexibility, a dynamic environment which can be utilised as and when needed and the infrastructures that you're going to need for that type of environment are not the technologies that people have necessarily in their data centres today," Webster said.

Does that mean a permanent reduction in server hardware? Is this a trend?

"Data centres will shift from being compute farms to infrastructure where information can be stored, delivered, and switched very quickly," he said.

"I think that the CIO focus is on efficiency and cost and therefore the pressure on all parts of information technology infrastructure will remain. I believe that the economic environment has caused the CIOs to sweat their assets longer of which the server fleet is a key part.

"You combine that with technologies like VMware and you're starting to see change in the approach.

"When you get a shift in technologies, when you get a consolidation of the unified network fabric into the unified computing platform, you're going to get a change and therefore there is going to be some erosion of the existing server market."

Some erosion in the existing server market has equated to a 40% reduction in year on year sales for the first quarter of 2009. The second quarter results, when they come in, should reveal a lot about whether we have merely witnessed a downturn or a true paradigm shift.

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Stan Beer


Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.



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