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Report: Server Market 'Refresh' Ahead

The server market is set for a refresh cycle in the months ahead, according to IDC's latest server virtualization report.

Global server hardware sales have been affected by virtualization and the economic recession. However, aging server hardware plus increased virtual machine densities have set the stage for a refresh, according to IDC's "Worldwide Quarterly Server Virtualization Tracker" report, released this week.

Virtualization is becoming more common, especially for new server deployments, according to the Framingham, Mass-based research group. IDC's report found that 16.5 percent of new servers shipped in the second quarter were virtualized, marking a two-percent gain compared with such shipments in 2Q 2008.

IDC defines server virtualization as a physical machine that has the ability, either through hardware or software, to host multiple partitions.

When looked at in a year-over-year comparison, global physical server shipments actually declined by 21 percent. However, the second quarter showed some signs that "stability is beginning to take hold in the worldwide server market," according to Matt Eastwood, IDC's group vice president of enterprise platforms, in a released statement.

HP led the field in the second quarter with a 36 percent market share of new servers shipped with virtualization. However, on a year-over-year basis, HP's shipments showed an 18 percent decline. Dell's virtualized server market share showed a nine percent increase for the quarter, slotting the company into the No. 2 position. IBM held third place for the quarter in server shipments with virtualization.

In the virtualization licensing market, VMware's ESX and VMware Server continued to lead Microsoft's Virtual Server 2005 and Hyper-V. However, in year-over-year comparisons, both companies saw virtualization licensing revenue declines (22 percent and 16 percent, respectively).

Citrix XenServer, which is now a free offering with some management functionality, showed a 108 percent increase in shipments year over year. IDC described Citrix's move to offer XenServer for free as a "bold seeding strategy…that will take some time to monetize."

Paid virtualization platforms now make up "more than 60 percent of all x86 virtualization license shipments," according to IDC. The change is due to mature virtualization deployments that require more refined management tools.

Cloud computing deployments have not dampened the market for physical servers in the enterprise, according to Brett Waldman, IDC's research analyst for system software.

"The cloud market is too young and immature for many enterprises to dip their toes in, never mind jumping in head first," said Waldman in an e-mail. "Over the long term, the cloud may affect enterprise IT's buying habits, but we have not seen that effect yet. If anything, the cloud, in the near term, will serve as an extension, not a replacement, of the internal IT functions."

About the Author

Herb Torrens is an award-winning freelance writer based in Southern California. He managed the MCSP program for a leading computer telephony integrator for more than five years and has worked with numerous solution providers including HP/Compaq, Nortel, and Microsoft in all forms of media.

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