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Virtualization Slowing Server Sales

Gartner sees server volume drop.

Call it a bit of foresight on my part. I asked a VP for one of the large server OEMs at LinuxWorld this year if, since their server business was largely about volume and less about service, if virtualization presented any tradeoffs since customers would be buying less hardware.

“Nonsense,” the VP said, “We just sell bigger machines. It all evens out.”

Last week, however, a new Gartner report indicates that server sales slowed in Q3. Gartner believes that server demand is still strong, but that virtualization is taking its toll on server volume.

Worldwide server sales grew by 4.4 percent in the third quarter but unit volume fell to 9.1 percent versus 12.8 percent in the second quarter. With virtualization allowing a server to run multiple OSes, applications, and processes — simultaneously — on a single machine you can easily infer that this technology could be responsible for the decrease in volume.

But it may be a bit soon to jump to that conclusion. Virtualization, while a technology with its roots in work done in the 1960s, is only just now really catching on for server consolidation in today’s datacenters. Virtualization is still in the early-adopter stage When we hit mainstream adoption then we could start to see real impact on server volumes and that could have an effect not only on OEMs but on part manufacturers as well.

In the meantime, while slowing, server sales still look positive with IBM holding the market share lead with 33.7 percent, followed by HP with 25.3 percent. In third place was Dell with 10.8 percent. Sun rose to 10.1 percent and fourth place, a jump attributed to the release of a new line of Opteron servers. Fujitsu placed fifth, with 4.9 percent of the market.

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