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x86 servers are moving up the ladder driven by multi-core processors and RAS features. Blades are doing well in revenue terms and solution stacks are in demand. By Prashant L Rao
The first half of 2011 was a good time for the Indian server market thanks to some big government deals. The second half saw a bit of a slump. For the entire year, the market grew by 9-10%.
“There has been a deacceleration on account of the Rupee depreciation and interest-rate hikes. We saw a lot of cases of purchases being deferred. However, there has been positive momentum from January. The economic scenario has eased a bit with RBI holding onto the interest rate and inflation coming down,” commented Pallab Talukadar, CEO, Fujitsu India.
The broad strokes of the Rupee going into free fall and tight credit put a dampener on the market for a while but with the Indian currency recovering and the RBI indicating that it will no longer try to curb inflation with rate hikes, things are looking sunnier. There was also the impact of the floods in Thailand that led to hard drive shortages.
“Because of the floods in Thailand all the server vendors faced shortages of hard drives. As far as x86 sales in FY11 went, sales to the IT/ITES sector took a hit and this market was a bit dormant in H1. In H2, we saw good uptake in the government. The manufacturing sector made investments in ERP, inventory management and CRM. There was some demand from SMBs. On an annual basis, there was a marginal increase in unit terms. Having said that, the delta isn’t like it used to be three years back. The average sales price has gone down as x86 is getting commoditized. On the Unix side, shipments fell year-on-year. Core banking is still using RISC, however,” commented Abhilesh Guleria, Country Manager, MMPG & ITPF Business, NEC India Pvt. Ltd.
“There is a positive sentiment now thanks to the currency appreciation and buying decisions that were on hold are getting released. Moreover, the RBI’s recent positive statements on interest rates have helped improve sentiment,” commented Rajesh Rege, Senior Vice President, Data Center, Virtualization and Cloud, Cisco India & SAARC.
On the whole, the industry perception is that the server market will grow at 9-12% this year.
Virtualization & Cloud computing
In the last couple of years, server virtualization has matured and companies in India have become comfortable with the concept. It’s not a stretch to say that this technology is part of the computing mainstream today.
“Virtualization is a big growth market for us. As customers virtualize more, they need less of traditional server hardware and people end up using more Cloud solutions. There’s a large increase in the data center build up. Tulip recently opened the largest data center in Asia in Bangalore. We are hosting some server platforms that are Cloud-enabled at the Tulip data center and allowing our customers to try and see how the private Cloud can be configured for them before they buy into the concept,” said Manoj Nayee, MD, Boston Ltd.
Cisco’s Rege felt that with processing power rising thanks to multi-core technology, virtualization became inevitable. “People are looking to harness these developments and we will see the increased adoption of virtualization. There is a significant surge of interest with regard to the Cloud. In terms of adoption, large enterprises are going in for the private Cloud while large Cloud providers are offering public Cloud services to SMBs,” he added.
Sridhar S, Director – Marketing, India Relationship, Dell India, was bullish about virtualization. However, with regards to the Cloud, he felt that adoption was low and that after proof of concepts, demand would be up this year.
Fujitsu’s Talukdar agreed that virtualization had entered the mainstream and that as companies started looking at resource management and orchestration, this would lead to the creation of private Clouds.
Mitesh Agarwal, CTO & Director – Systems Solution Consulting, Oracle, said that virtualization was a part of every deal and that the adoption of the private Cloud was higher than that of the public Cloud.
It’s clear that corporate India is embracing the private Cloud, albeit slowly. However, given the widespread deployment of server virtualization, it’s the next logical step to move onto the private Cloud.
Demand patterns
Across the board, vendors saw the government as a big spender. BFSI was another popular sector. Manufacturing, telecom, media & entertainment, energy, research and healthcare were also mentioned.
Boston’s Nayee felt that Media & Entertainment, Energy, Oil & Gas and the Research sector would drive demand.
Cisco saw demand coming from IT/ITES, BFSI, government and service providers.
For Dell, BFSI, telecom, IT/ITES, healthcare and manufacturing (Unix to x86) were the likely buyers.
Fujitsu saw the government continuing to be one of the biggest buyers followed by BFSI and manufacturing/SMB.
Oracle saw demand coming from BFSI, telecom, government/public sector and healthcare.
NEC saw demand from traditional markets such as manufacturing, BFSI and government. “Going forward, the government is the vertical to watch. Investments into larger NeGP programs will continue to grow as will power reforms etc. Manufacturing is heating up with electronic and component manufacturing doing well in addition to the automotive sector. The SMB sector will be a critical factor that will drive IT adoption. BFSI and IT/ITES are both driven by global influences. Retail expansion will continue in BFSI,” said Guleria.
He saw the new areas of demand being predominantly pushed by Cloud initiatives with Private or hybrid Cloud taking off in the enterprise. “The public Cloud will take time to catch on in India. With 3G networks being rolled out alongside WiMAX, we will have to see what kind of network bandwidth consumers can get. As telcos roll out these services and the penetration of tablets and smartphones increases and people start demanding lot of content on those devices, that will fuel content-heavy platforms leading to IT consumption,” felt Guleria.
Technology introductions
On the x86 front, both Intel and AMD have some interesting technology roll outs on the anvil and server vendors would be coming out with product refreshes around these.
Boston’s Nayee felt that AMD’s 16 core on a single socket offering, was well suited to virtualization. From Intel, a dual-socket Sandy Bridge product is expected in March. “There will be a natural technology refresh on account of that. We are setting up benchmarks in labs to compare the latest gear with previous generations,” he commented.
Boston’s working with Nvidia on hybrid computing where it meshes CPUs and GPUs. Similar technologies from the likes of Intel—Many Integrated Core or MIC—are on the cards for later this year.
The company’s also working with alternative chip developers to develop a server product using ARM. “We will start in June this year. Power savings is the key benefit there as it offers a very low power server environment. However, people will have to port apps onto this platform,” said Nayee.
Dell was bullish about Intel’s upcoming Ivy bridge architecture. “We have had a lot of 4-sockets go into the market,” said Sridhar.
“We are internally aligned to the journey to the private Cloud. Our focus is around the solutions space there. We continue to track Intel’s newer processors and will have a server refresh based on the new generation of Intel processors,” said Fujitsu’s Talukdar.
Oracle is pushing its T4 processor in 1-4 socket boxes. With 8 cores/CPU, this platform is targeted at database and application servers. Then there’s the SPARC SuperCluster T4-4 which is a general purpose engineered system that uses T4 processors, Oracle software for the database and Exalogic software for Web and application tiers.
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NEC is focusing on platforms that can power non-stop, critical operations. “The differentiator is that we have built these using open standards like motherboards from Intel, Windows/Linux etc. so that ISVs don’t need to port their software. Business continuity/ HA/ DR becomes critical, once services take off. We have an integrated HA/ DR platform and the #1 platform for automated clustering in APJ,” said Guleria.
HP has its Redstone initiative with servers built around ARM processors. This is aimed at the education and content delivery markets. The platform offers power savings as you scale on a hyper mode with as many as 2,000 servers per rack.
Solution stacks
No discussion of the server market would be complete without a look at the solution stacks that bring together hardware, software and services in a ready-to-use bundle.
“There are more deals where people want the application stack validated and integrated as an all-in-one solution. This is especially true in a database type environment with SAP or Oracle. In terms of the storage platform, people want to see how they can get greater bandwidth and higher performance,” said Boston’s Nayee.
Cisco’s Rege commented, “We are seeing interest in integrated stacks because of proven levels of performance, ease of deployment and prefabricated integration. For VCE, the customer lets us know how many VMs are necessary, how it needs to be architected and we configure the same before the machine leaves our facility. From a conversion point of view it’s 10% but in terms of interest levels, I would say that it’s 35%. When you are putting all of these things together, there’s a services element that’s built into the stack. In markets where skill sets are in short supply, the adoption of integrated stacks has been high. In markets where significant skills exist with customers, there’s a debate on whether they want a preintegrated stack or to buy components and put them together in-house.”
Dell’s Sridhar said, “Integrated purchases are being considered. What’s changed is that customers have realized that they need to look at the entire requirement—storage, server, software and workload. They are able to get an optimal solution when they put these together. They may deal with several vendors and get an SI to put it together or choose to get everything from a single vendor.”
HP’s seen adoption of its integrated stack for Cloud deployments. “Every customer of ours who’s on the Cloud is a Matrix user. It’s taken off with service providers to begin with. Manufacturing and FSI are the other early adopters,” said Vikram K, Director, Industry Standard Servers, HP India.
NEC’s Guleria said, “We offer an integrated HA/DR solution certified on standard servers and OSs. Besides standard global apps (SAP & Oracle etc.) there are domestic apps (Ramco, TCS) and professional accounting (Tally etc.). We enable domestic apps to get validated on our platform.”
RISC vs. x86
Over time, we have seen RISC cede some workloads to x86 as the latter has moved up the performance ladder and acquired RAS attributes. In addition, applications that were once solely available on UNIX variants are nowadays making their way onto Linux-x86.
“Since Intel launched Sandy Bridge and the Xeon MP, the Westmere EX range, Nehalem EX, etc. we are seeing a lot of people migrating to x86 from RISC,” commented Boston’s Nayee.
Cisco’s Rege said, “The RoI on RISC has been dropping and applications that were exclusively on RISC are now available on x86 and more cost-effective to boot. RISC traditionally provided a higher RAS. Today the same RAS features are available on platforms such as Cisco UCS. There’s a significant shift from RISC to x86 in terms of both new deployments as well as migration from existing environments.”
Dell’s Sridhar said, “The gap in performance is narrowing. Scale-out is beginning to improve.”
Both the middleware and database layers have traditionally been dependent on vertical scalability, which has been and continues to be RISC’s strong point. However, with solutions like Oracle RAC, you can scale these layers horizontally as well and therefore run them on x86.
Fujitsu’s Talukdar felt that HA features were now there on x86 and, as a result, apps that were formerly tied to Unix in BFSI and telecom were now moving to Linux.
HP’s Vikram said, “x86 is scaling up from the performance point of view and all of our innovations are around the ability to scale and reduce power consumption as you scale. In telecom VAS, x86 has seen phenomenal growth.”
Blade servers
For some years now, blades have been heralded as the platform of the future. However, despite apparent advantages such as ease of deployment, manageability etc. blades continue to play second fiddle to rack mounts.
“Some customers don’t want to be locked in. Once you go with a blade platform, you have to buy that brand. Moreover, the initial capital outlay is higher. However, from the enterprise perspective, it’s the most resilient platform around. We see our blade servers being deployed in the enterprise sector. In the SMB space, we haven’t seen an increase in blade shipments. Rather it has been about 1U and 3U rack mounts,” said Boston’s Nayee.
Cisco is uniquely placed among server vendors insofar as the bulk of its server shipments are accounted for by blades.
Dell’s Sridhar commented, “If you look at the unit share of the blade segment, it’s in the 14-18% bracket. If you look at revenue share of the blade market, it’s hitting the 30s. This was never the case. In terms of units, the number of rack units being sold is pretty high. Blades, in terms of fully populated, chassis, are beginning to get there. They are being deployed for mission-critical apps. We have more than doubled our blade volumes in the last two years.”
Fujitsu’s Talukdar analyzed the blade category saying, “There are three key factors: blades are the best when it comes to scale-out but when you talk of scale-up, you have greater flexibility on rack-mount than on blade. Secondly, the cost of acquisition of a blade tends to be higher. Thirdly, at some level, a blade tends to become proprietary. In a rack, every alternate rack can be from a different vendor. There have been a couple of attempts to put up a 4-way blade but because of the limited real estate it ends up being something of a compromise.”
NEC saw blade server uptake on the rise, especially in the data center for server consolidation.
HP saw 30% YoY growth for this category as part of its Converged Infrastructure.
Oracle saw demand for blades in telecom as density was a big parameter here.
Clearly, there are some things that blades do best and, in workloads where space utilization and performance are vital, these products score.
AMD on the server
AMD has had a rocky time in recent years. On the server front, it appears to have a good play in both entry-level servers and in the HPC segment.
“AMD has been very strong on the uniprocessor side of the market as they have a strong value-for-money proposition. We have launched a new range of AMD uniprocessor servers for the Indian market for 2012. On the dual socket side, our servers are predominantly Intel-based. Recently, with Interlagos, we have been winning orders for virtualization deals with AMD-based products,” said Boston’s Nayee.
Cisco’s a purely Intel shop as is NEC. Dell’s experience has been that AMD-based products are selling fairly well in HPC/ government deals.
From all of the above, it is clear that the server product category is mature in terms of growth having eased and at the same time resilient enough to shrug off currency woes or hard drive shortages without too much of an adverse impact. On the technology front, x86 continues to grow stronger in terms of its ability to handle ever larger workloads and as the basis of the private Cloud. Blades have come along in revenue share although the unit share belongs to rack mounts. On the whole, 2012 should be a moderately successful year for the server market, perhaps a bit better than 2011.
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