Servers pulled through another growth year, with entry level showing good traction. Vendors attribute this to the IT spend by enterprises that remained buoyant throughout the year. The sentiment that servers are not an exclusivity of large enterprises but also very much the domain of SMBs, was further reinforced. The fall in end user price points has empowered SMBs to adopt servers and consolidate their IT environment. As usual, the key verticals that drove the server market to glory were BFSI and telecom. While banks expanded their core banking solutions and opted for more servers, the demand from telecom was driven by the increase in subscriber base that called for more IT hardware. Meanwhile, manufacturing also emerged as a hot vertical during the year with companies embracing technologies such as dealer management system, CRM and SCM. This drove the demand for all types of servers.

x86 Servers: The Buoyancy Continues
This server segment continues to show traction y-o-y. This segment of the server market, which takes the bigger slice of the pie is the fastest growing server market across Asia Pacific, this is mainly due to the mandate all vendors have in this space. In the last two years, x86 market dynamics started changing with vendors such as Sun, which is traditionally a UNIX player, started attacking with x86 offerings. Last year, Sun Microsystems made its presence felt in the x86 market and is gunning for more share worldwide. In India, Sun is one of the major players catering the x86 space and gained customers such as Air Deccan, Max New York Life, NIC, HDFC, Cisco, Veritas, Cadence and Texas Instruments.

Why is x86 server growing at a fast pace? The answer lies in the price and performance factor. The market acceptance for x86 is driven by three factors-scalability, reliability and affordability. This makes it a volumes segment in the server space as organizations accrued distinct value by adopting x86 technology. If we look at the affordability side of things, x86 server prices hit an all time low during the year with all vendors offering entry level servers based on x86 architecture for the price of a PC. In fact, in this segment of the market, the distinction between a professional PC and a server is blurring.

However, CIOs looking for more RoI out of their IT investments took a multi pronged view of affordability over the year. For instance, any investment on servers is based on ramping up the backend IT infrastructure that can scale the enterprise demands. Over the year, CIOs looked at peak performance at affordable prices. Industry experts believe that the key to success in the server market lies in understanding user demands and providing technologies that are affordable when they require it. For instance, organizations go through seasonal demands on their computing resources. 

For companies whose requirements peak in patches-only during specific periods. For instance during Wimbledon, the hits on the site peaks to 4 mn per day, while normally it is not more than a few hundred. For eg, a company's HR department needs peak power during the last three days due to payroll work and the capacity remains unutilized during balance times.  Hence capacity utilization and planning became a major thought during the year and vendors offered flexible options to enterprises, which can scale up and scale down as per the load demands. Affordable x86 server hence became an ideal option for enterprises to create modular server architecture and to meet the demands.

Perhaps one of the biggest trends witnessed in the x86 market was the momentum vendors saw on x86-64 bit adoption. Last year saw just the tip of the iceberg. According to estimates, more that 50% sales during the year were on 64-bit. Going in for x86 64 was seen as a win-win situation with compatibility becoming a non-issue over the year. For instance a user can run both 32 and 64 bit applications.

All vendors have been delivering 64-bit architecture over the last many years.

If one looks at vendors such as Sun over the last fiscal, it has grown and consolidated its position in the x86 64-bit market. This was achieved primarily as a result of Sun's focus and thrust on Opteron based servers. As 64-bit computing gained further ground over the year on x86 server spaces, customers of one-way and entry-level two-way servers graduated to high-end two-way systems. The move from 32-bit to 64-bit computing offered a dramatic improvement in performance and reliability, enabling enterprises to use computing resources in exciting new ways. In November 2005, Sun also unveiled its Galaxy family of servers, which was designed ground-up for the entry-level server market.

Meanwhile, big blue IBM also pulled another good year on x86. System x is the brand name for the x86 server range from IBM, previously known as xSeries. IBM's traction on x86 is evident from its leadership position retained year after year. On the Linux front, all vendors attacked the market with great aggression and offered price advantages to the users by offering Linux. For instance, IBM took to SMBs highly customized solutions. It launched during the year servers such as OpenPower (Linux on power technology), that brought reliability and flexibility at an affordable price for SMBs. 

Indian vendors such as HCL also had a good year on servers and growth has come from across all segments for HCL. The company has recently unveiled its generation-next range of servers, based on Intel Dual-Core Xeon 5000 chipsets. These new class of servers, which can support multiple operating systems, are primarily meant for mid-end enterprise requirements. 

 Meanwhile, AMD which started the 64-bit market movement also had a good traction over the year. According to estimates from Mercury Research, in first quarter of 2006, AMD's share of the global x86 server market grew to 22.1%, up from 16.4% in fourth quarter of 2005, a 35% increase. AMD has identified India as an important market and designated it as a high growth region.  In terms of technological progression, AMDs next-generation architecture for servers, workstations and desktops are planned to debut in mid-2007, and is expected to extend AMD's leadership in platform performance-per-watt as well as its leadership in critical enterprise application performance. Products will include a quad-core design for servers, workstations and high-end desktops, and a dual-core design intended for mainstream desktop markets. 

Non x86 Servers: Going strong
India still remains very much a UNIX country with mission-critical application deployments across BFSI, telecom and energy sectors. According to vendors in the fray, the RISC architectures have been synonymous with servers for over 15 years now and the scene is no different today. Compute-intensive server applications such as data warehousing, decision support or large enterprise resource planning tasks were particularly able to take advantage of the tremendous processing power that RISC servers offer.

Moreover, users can scale their systems simply by adding more processors, a key consideration for IT departments running data warehouse or decision support systems that quickly grow to multi-terabyte size. RISC servers also provides superior throughput due to their basic architecture giving customers high operational efficiency and stable performance. RISC servers can do more in less time. Hence, RISC servers still remain a popular option among BSFI, FMCG, services, education and textiles.

For IBM, the major gain in the last few quarters has been from the UNIX server business. This server space was traditionally dominated by SUN, and IBM was not that strong. With the launch of its power 5 range that also set good performance benchmarks, things started changing for IBM. Moreover, in recent times, IBM has gained huge traction in this space. The UNIX server market over the year became a three-horse race with IBM, Sun and HP battling it out for more market share. Growing aggression IBM demonstrated in the UNIX space over 2005 provides ample pointers that during the ongoing year there would be an intense race for supremacy between IBM and Sun.

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