IDC: Changes afoot in the x86 server market

A report released Tuesday by IDC shows that unit demand for x86-based servers will decline due to use of multicore processors and virtualization.

Shipments of servers powered by x86 processors will not grow as fast as previously forecasted, but x86 will remain the dominant chip design, according to IDC.

The market researcher has scaled back unit growth forecasts for x86-based servers, citing the market transition to multicore processors and demand for virtualisation. Both technologies give servers more computing power, thereby reducing demand for new servers.

IDC forecasts that worldwide unit demand for x86 servers will grow by just 39 per cent between 2006 and 2010, down from an earlier forecast of 61 per cent. This means that IDC has trimmed 4.5 million unit shipments and $US2.4 billion in revenue from its forecast for 2006 to 2010.

But by no means is the x86 fading away. It is expected to actually grow its unit market share to 94 per cent in 2011 from 93 per cent in 2006.

"Definitely, the x86 remains the growth engine of the market, but the way customers are spending their money there is shifting," research vice-president for IDC's Enterprise Platforms and Datacenter Trends, Michelle Bailey, said.

Based on revenue, the x86 enjoyed 50 per cent market share in 2006, Bailey said. By 2011, x86 would grow its revenue market share to 56 per cent.

Virtualisation is technology that allows a server to run multiple operating systems and software applications simultaneously, so a business can run on one server programs it previously would run on, say, four servers.

It aided in the consolidation of server deployments by an average ratio of 5:1, Bailey said. And as chip makers developed dual-core or quad-core processors, customers could get even more work out of fewer servers.

"The intersection of the two is what's really having the impact on the market," she said.

The two top server vendors are confident they'll succeed in this shifting market.

"It may reduce the count, but the systems that you do sell become richer configurations because memory has to go up to match the processor capability [and] the input/output has to go up to match the memory and the processor," global business manager for System x servers at IBM, Rob Sauerwalt, said.

HP has seen the market shift that IDC identifies over the last four to five months.

"What we're finding is that our volumes are not declining," director of technology strategy for industry standard servers at HP, Rich Palmer, said.

IBM held a 38 per cent share of the worldwide server market based on revenue in the fourth quarter of 2006, according to IDC, compared to HP's 27 per cent. Most of that was from the sale of x86 servers. HP's revenue grew 5.1 per cent and IBM's 3.8 per cent, during the quarter compared with figures for the same quarter in 2006.

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Robert Mullins

IDG News Service
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