Virtualization Cutting into Server Sales?

Saw this story from yesterday, referring to the contents of the latest IDC report on virtualization and multicore servers.

According to the article (I haven't seen the IDC report itself), the new material contradicts certain earlier reports that had been enthusiastic in forecasting sales and shipments of x86 server equipment.

More interestingly, the new report, "Virtualization and Multicore Innovations Disrupt the Worldwide Server Market," discusses the impact that that virtualization technology is likely to have on the market for X86 servers. The report says multicore and virtualization will cost the x86 market more than 4.5 million shipments and $2.4 billion in customer spending between 2006 and 2010.

IDC's report goes on to say that server virtualization will lead to increases in other areas of the server business, as IT managers relying on virtualization look toward more powerful equipment that can be more reliably divided up in terms of processing power, storage and other features.

Analysts, these days, seem to generally be on the lookout for something optimistic (or glaringly obvious) to say. And it can sometimes be difficult to parse it all, particularly with a contrasting opinion available in many cases (the story in the link includes contrary remarks from a Forrester Research analyst).

Common sense might reasonably lead somebody to believe that virtualization technology, which can enable a single server, in a wide variety of settings, to perform the work of several servers, might have an impact on the overall sales numbers in terms of server hardware. And that impact would, logically, be in the direction of fewer physical servers needed, fewer servers required.

But then, I don't pretend that my basic analyzing capabilities make me some sort of analyst.

One similar cause-and-effect outcome I'll be interested in seeing results from is the impact that some of the new emerging grid computing technology (particularly in the more Web hosting specific environments) might have on server sales.

We've discussed in the past how older servers - equipment that might not be up to the typical dedicated-server task - can be useful in constructing grids for delivering utility-based computing. Prolonging the usefulness of older machines will have an obvious impact on the server life cycle, which will no doubt have an impact on server sales.

As grid computing becomes more widespread in the hosting business, it'll be interesting to see how that impacts server sales, and how hardware makers adapt.

TAGS: virtualization, server