Why Server Sales Are Doing Surprisingly Well in a Challenging Economy
With the economic problems around the world right now, you might wonder how that is affecting the IT industry — and the server market in particular. Would companies retrench and hold back on spending? The answer is that, with results counted from the first six months of an admittedly challenging 2008, the server business is apparently doing quite well. And Itanium fared well, too — with results that may suggest some of what is happening behind the scenes.
The results, which were summarized in a recent survey released by Gartner, Inc., include an interesting statistic: that worldwide server shipments in Q2 2008 were up 12.2 percent over the same quarter last year. Revenues were up as well, but by a smaller amount, 5.7%. This more-than-reasonable performance in a tough economic climate was driven by a combination of a “continued upswing in x86 server replacements” plus “Web center build outs” and growth in emerging markets.
That refers to the entire market, but how did Itanium fare in the same period? From one respect, raw shipments, not as well, with Gartner reporting that “RISC-Itanium Unix Servers” saw a 7.9 percent drop from the same quarter a year earlier. However, revenues for this server category were growing at a rate of 9.4%. As Jeffrey Hewitt, research vice-president of Gartner said, this indicated “that higher-end systems were the hardware platforms that drove sales in this space.”
One conclusion behind all this is that, even in a tough economy, IT executives continue to make the decision to upgrade their systems to increase productivity through performance improvements, higher availability and lower cost-of-ownership. Good tactics, under the circumstances.
The investment in higher-end Itanium systems at a considerably higher rate than in previous years suggests a more strategic move is also taking place as well. With major enhancements introduced for Itanium this year with emphasis on Virtualization, plus a number of developments that make Itanium-based server solutions more dynamically configurable on the fly, my guess is that you are also seeing an increased rate of server consolidation for companies that can afford to do so. All of which positions those companies even better when the overall economy begins its upswing, hopefully sometime in the near future.
Not a bad strategy, and the revenues are high enough to suggest that far more than just a few good companies are making this change. It is something for all IT organizations out there to consider as the economy continues to navigate the current doldrums and charts a course for a stronger recovery path ahead.
So stay tuned. My guess is that data for the third quarter will show even more of this trend.
Tags: Gartner, market trends, TCO