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Research highlights dramatic decline in server spending

There is overwhelming evidence that spending on servers is slowing down significantly across a number of market sectors in some cases by up to a factor of five, according to research conducted by TechNavio from Infiniti Research.

Using TechNavio, Infiniti has identified the trend as the direct result of virtualization deployment and the drive to greener computing. The findings have been released to time with Storage Expo, being held at Olympia on 17th October.

Rahul Agarwal, co-founder of Infiniti Research and head of business development for TechNavio, stated: “According to research in 2006 data centers worldwide housed about 29 million servers, having grown at 15% a year since 2000. By units, server shipments grew 5.9% in 2006 according to IDC, but our analysis of current server shipments and virtualization adoption levels suggests that this growth is going to slow to only 2% in 2008. By 2009 it will actually go into a sustained decline to reach about 24.5 million by 2014,”

“Our view is that to offset this volume pressure, hardware vendors will be forced to improve unit margins by building in virtualization capability, memory and I/O interfaces in the hardware. Our research also appears to indicate that some vendors may push thin client sales as desktop virtualization proliferates,” he continued.

“For hardware vendors attending Storage Expo this year our message is this – the server market of tomorrow will be a value game and not a volume game. In addition, compared to yesterday, hardware vendors will need to cooperate much more closely with software, services and networking vendors in order to meet client needs and win in the market,” he added.

While the initial pace will be set by large enterprises, the long-term play in green computing is clearly in the SMB sector, which typically is less efficient in that they use lower end servers and have not gone through server consolidation on the same scale as their larger peers.

TechNavio has identified Stonebridge Bank, a small regional bank in Pennsylvania as an organization driving this trend. It has recently gone from 131 servers to just 26.

One other key finding of its research is the impact server consolidation and virtualization will have on the environment.

“According to our research the average sized server has the same carbon footprint as a mid sized four wheel drive consuming 17 litres of fuel to travel 100km. Therefore, over the next five years or so a reduction of somewhere in the region of five million servers will have the same environmental impact as taking five million four wheel drives off the road!” concluded Rahul. monitors all leading technology stories and rounds them up to help you save time hunting them down.