Servers Grow, New VIA Processor and IBM Servers

Reports of worldwide server sales came out this week demonstrating that purchasing continues to be strong despite concern of the push towards virtualized environments. Elsewhere, VIA Technologies released details of its new energy-efficient Nano processor, while IBM Corp. announced three new Advanced Micro Devices, Inc.-based rack servers.

Focal Points:

• Global server sales remained strong this quarter, growing to between $13.0 billion and $13.6 billion in sales. That represents between a 3.5 percent and 7.6 percent growth rate in dollars over the same quarter last year, depending on measurement technique. Blades continue to be the largest growth sector rising almost 55 percent compared with sales numbers last year. Hewlett-Packard Co. maintains its slight lead over IBM, while Dell, Inc. demonstrated it is back on track by selling 15.8 percent more boxes than the year prior. Server sales in excess of $500,000 represented the biggest growth area at 9.7 percent, followed by mid-range sales at 7.2 percent. Commodity systems priced under $25,000 grew 5.4 percent from the same quarter last year. Concern over an imminent decline in server proved unfounded in this quarter, as many computing applications cannot or have not yet been virtualized. Moreover, requirements for new applications continue to show strength.
• VIA Technologies, best known for manufacturing low-power processors for the small form-factor and embedded systems, is aiming to take on Intel Corp. and AMD with its upcoming Nano offering. The Nano product line features five processors ranging in speed from 1.0 gigahertz (GHz) to 1.8 GHz. All use an 800 megahertz (MHz) bus and draw between five watts and 25 watts of maximum power. As the new processors are pin-compatible with VIA's existing C7 range, customers can upgrade to the new processors to gain two to four times better performance. As the most energy-efficient mainstream processor available, VIA hopes it can offer a compelling alternative for the embedded and desktop/notebook markets. The Nano also features enhanced VIA PadLock technology for cryptographic acceleration and security. Availability will begin in the third quarter.
• IBM is releasing three new rack servers based on AMD quad-core processors. The System x3455 is aimed at financial, technical, and scientific applications. The addition of quad-core processors makes it more compelling for high performance computing applications, according to IBM. The System x3655 is aimed at database, virtualization, and Web serving, and can be configured with up 64 GB of memory. It can accommodate two processors and pricing starts at $2,499. The third model, the System x3755, can be configured with up to four processors and 128 GB of memory. With prices beginning at $3,407, IBM claims that the three socket configuration of the server can outperform many four socket servers.

Experton Group believes the continued growth in server hardware is predictable, and should continue to follow suit for the foreseeable future. While virtualization initiatives are underway at most enterprise organizations, the technology is still in the formative stages and corporations have a great deal of planning and architectural work before a majority of applications can be virtualized. Even when this point occurs, Experton Group believes that the requirements for increased server-based computing will continue to grow as the need for increased computing capacity will continue to grow as information and application requirements double at least every five to seven years.

VIA's new processor offerings should be compelling, but it remains to be seen whether original equipment manufacturers (OEMs) are willing to welcome a third player into what is primarily an AMD and Intel duopoly. As energy efficiency requirements, server-based processing, and thin client initiatives take greater hold in enterprises, Experton Group expects that power per watt will continue to low energy systems will become of increasing interest. New servers from IBM and others will offer ever-greater performance for the price. IT executives should expect data center needs to grow as information requirements outpace the server and storage performance increases, and should evaluate both in-house and the multitude of outsourcing opportunities to best mitigate cost and personnel pressures.