Modular Machines Take A Bite Out Of Racks And Blades
Enterprises and some supercomputing centers took a shining to blade servers a decade ago and these converged platforms, which pack servers, storage, and switching into a single box with shared power, cooling, and management as well as redundancy in key components, continue to sell well. But the new density-optimized, modular, multinode servers that are designed for hyperscale and HPC workloads are, generally speaking, growing faster and are taking a bite out of blade and rack machines in some cases.
That is the consensus of Jed Scaramella, research director of enterprise servers and datacenter at IDC, who is part of the team that puts together the server tracker data that is one of the two report cards that system makers get every quarter. (The other comes from Gartner, and EnterpriseTech already reported on that company's assessment of the server market here.) With both reports, you can get a 3D feel for what is going on out there in Server Land.
IDC believes that in the second quarter ended in June, companies consumed some 2.2 million server units, generating $12.6 billion in revenues. This is what many of us who have been watching the systems racket for decades would call a healthy level of sales, and the fact that sales were this high when Intel is expected to soon be launching its next-generation "Haswell" Xeon E5 processors, is remarkable. That said, overall revenue growth was only 2.5 percent in the quarter, and shipment growth was a more anemic 1.2 percent. But, growth is a whole lot better than decline, and considering that IBM mainframes are at the end of their cycle and IBM and Oracle have just introduced new Unix platforms, this level of growth is about all once can expect.
Blade servers, which are a foundation for virtualized and private cloud infrastructure at major enterprises, did better than the class average across servers, with 7 percent revenue growth to $2.1 billion. That's a 17 percent revenue share of the server pie. Hewlett-Packard still rules here with 42.2 percent market share, compared to 25.2 percent for Cisco Systems and 13.7 percent for IBM.
If it had not been for density-optimized machines, sales of blade servers might even be larger. Density-optimized machines mix the best features of rack servers and blade servers and which generally are minimalist when it comes to features because any resiliency that is required in the stack is put into the systems and application software and redundancy in the data as it is spread across multiple nodes. Microsoft had a very big set of orders for servers as it was building out its Bing search and mapping services in the first half of last year, so the compares for density-optimized machines are tough here in the second quarter. Sales of density-optimized machines fell by 7.6 percent to $768 million and unit shipments fell by 16.1 percent to 216,314 machines, according to IDC. That is close to 10 percent of total shipments, even with that decline.
As best as IDC can figure, the hyperscale datacenter operators are consuming about 20 percent of shipments worldwide. (This figure does not include dedicated hosting or public cloud infrastructure, but rather machines that run very large data storing or analytics workloads or distributed online applications. Think Google and Facebook with a smattering of very large supercomputing labs.) About 55 percent of the shipments into these hyperscale companies are density-optimized machines, and the remaining 45 percent sold into hyperscale businesses are rack machines, says Scaramella. These companies do not buy blade servers, and they sure do not buy tower machines. The density-optimized machines are not just for hyperscale and HPC shops, but are also seeing uptake in recent quarters for virtual desktop and hosted desktop workloads among large enterprises – a place where blades have been doing well.
The density-optimized server market is something to keep an eye on, and it is also best gauged on an annual basis, not on a quarterly basis, because of the choppiness of the orders from the big hyperscale datacenter operators. In 2012, server makers, including the original design manufacturers (ODMs) that make machines on behalf of customers, pushed 855,000 density-optimized machines, up 50.4 percent over 2011, and revenues came in at $2.5 billion, up 53 percent. Last year, customers bought a little more than 1.1 million density-optimized systems and the boxes generated $3.56 billion in revenues. And the funny bit – perhaps contrary to expectations – is that average selling prices rose for these machines. It is not clear how 2014 will turn out, but it will take some big hyperscale deals to get some growth here, and with new processors coming out from Intel, this is not only likely but probable. And this part of the market will continue to grow and stabilize as enterprise customers adopt hyperscale software and hardware approaches.
The other interesting bit from the latest IDC server stats is the growth among those ODM suppliers, who accounted for $835 million in revenues in the second quarter, a 24.7 percent increase year-on-year or, said another way, ten times the growth of the market at large. Hewlett-Packard was the revenue leader in servers according to IDC, with $3.19 billion in sales, up 4 percent. IBM was number two at $2.97 billion but fell 10.2 percent because of declines in mainframes and Power Systems and a stall as it is in the process of selling off its System x division to Lenovo Group. Dell ranked third with $2.08 billion in sales, down 6.5 percent, while Oracle was in a statistical tie with Cisco Systems for fourth place. Oracle had $737 million in server sales in Q2, up 3.9 percent, while Cisco posted $727 million in revenues and rose by 35.4 percent. The remaining vendors in the market had over $2 billion in sales and grew 16.4 percent as a group. Inspur, Sugon, Lenovo, Quanta, Supermicro, and other upstarts from Asia drove a lot of that growth.
