Hyperscale Environments Pressure Server OEMs

Hyperscale data centers continue to be the key drivers of growth in the global server market and the increasing influence of smaller system makers in the space, according to analysts with Gartner and IDC.

Hyperscale companies like Facebook, Amazon, Microsoft and Google run massive data centers that have insatiable appetites for servers and other data center infrastructure systems, and they have the IT resources to bring in white boxes and integrate them into the environment.  The result is that while traditional server OEMs may see gains in both server revenue and shipments, original design manufactures (ODMs)—Gartner analysts pointed to Quanta and Wistron as key examples—continue to outpace most of them.

Both analyst firms released their numbers March 9.

Gartner Research Vice President Jeffrey Hewitt said in a statement that, in the last three months of 2015, the “other vendors” category on the list saw significant boosts in their fortunes, a trend that has been going on for several quarters. In the fourth quarter, ODMs like Quanta and Wistron generated more than $750 million in revenue and more than 170,000 in server units shipped, Hewlitt wrote.

“This demonstrates that the growth of hyperscale data centers, like those of Facebook, Google and Microsoft, continues to be the leading contributor to physical server increases globally,” he said.

In the last quarter, the “others” category saw revenues grow 18.9 percent year-to-year, just under Cisco Systems’ 20.2 growth but significantly higher than other top system makers, including Dell, IBM and Lenovo. Only Hewlett Packard Enterprise (HPE) saw a drop, of 2.2 percent. In server shipments, the “others” category saw a year-to-year increase of 16 percent, behind Inspur Electronics and Huawei Technology, according to Gartner numbers. HPE and Dell retained the top two sports, but shipments for both fell between 0.3 percent and 2.6 percent.

IDC analysts said that for the entire year, ODM and direct vendors saw revenues increase 10.4 percent. Of the others on the list, only IBM saw a decline—of 23.8—while Lenovo’s revenue jumped 169.4 percent. Both numbers were driven by Lenovo’s $2.3 billion acquisition of IBM’s x86 server business. According to Kuba Stolarski, research director of IDC’s Servers and Emerging Technologies unit, the numbers for the fourth quarter and full year 2015 were driven by hyperscale cloud deployments as well as on-premises refreshes.

“As the cyclical refresh of 2015 comes to an end, the market focus has begun to shift towards software-defined infrastructure and hybrid environment management, as organizations begin to transform their IT infrastructure as well as prepare for the compute demands expected over the next few years from next-gen IT domains such as IoT [Internet of things] and cognitive analytics,” Stolarski said in a statement. “In the short term, 2016 looks to be a year of accelerated cloud infrastructure expansion with existing footprints filling out and new cloud data center build outs across the globe.”

Hyperscale companies put as much of an emphasis on power efficiency as they do on performance, and they will use white box systems—servers, storage appliances and networking gear—to keep capital expenses down. They also have the IT staffs that can integrate the systems into the environment and manage them, driving down their needs for support and services that come with branded systems from the likes of Dell, HPE and Lenovo.

OEMs aren’t sitting still. HP in 2014 partnered with Chinese contract manufacturer Foxconn—better known for making mobile devices like smartphones and tablets—to build open, low-cost servers for cloud environments. A year later the companies launched the first systems in the new Cloudlineportfolio that use standards developed within the Facebook-led Open Compute Project.

For its part, Dell’s Extreme Scale Infrastructure (ESI) organization includes the eight-year-old Data Center Solutions (DCS) unit, which was launched to develop customized and optimized systems for the largest hyperscale companies, such as Google, Facebook, Amazon, eBay and Baidu. Also under the ESI umbrella is the Datacenter Scalable Solutions (DSS) group, targeting organizations that aren’t as large as the hyperscale players, but still need customized and optimized infrastructures that are differentiated from the PowerEdge systems that Dell sells to enterprises.


[source :-serverwatch]