Friday, October 19, 2007

Lower-end servers

As in years past, much of the growth took place in lower-end servers costing $25,000 or less--a category that accounted for 6.8 million of the 7 million units shipped, Eastwood said. As these systems assume important duties and simultaneously juggle multiple tasks through virtualization technology, they more often are sold with large amounts of memory and internal storage, Eastwood said.

"The systems and configurations going out are much richer," he said, a fact that's slowing the decline in average selling prices that has been typical in the computing industry.

AMD's Opteron processor made significant strides in the lower-end market. Servers using AMD's chips accounted for 6 percent of the x86 server market in the fourth quarter of 2004, with the rest being Intel chips, but a year later increased to 14.3 percent.

"There's real strong movement there," Eastwood said.

The lower-end server market is strategic because it's growing faster than the overall market. For example, in the fourth quarter, x86 server sales grew 6.7 percent to $6.8 billion while the overall server market shrank 0.2 percent to $14.5 billion.

Another growth category is blade servers, thin models that slide side-by-side into a chassis like books into a bookshelf. The chassis interconnects the blades and supplies communal resources such as power and networking hardware.

Blade server revenue grew 84 percent from $1.15 billion in 2004 to $2.11 billion in 2005. Meanwhile, blades themselves got more powerful and their average price rose from $3,750 to $4,200 during the same period, he added.

IBM continues to lead the blade market with 40.9 percent of sales. HP is in second place with 34.5 percent, while Dell trails in third at 10.1 percent.

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