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5/30/2014
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Does Cloud Really Hamper Server Sales?

Common sense suggests that mainstream cloud adoption will gut server sales, but that's not really happening, analysts say. Here's why.

server, and that number is much higher globally, according to Techaisle data.

"It is a fallacy to assume that all first-server businesses will migrate to a cloud server," Agrawal said. "With security, server configuration, and managed services, the cost of using a cloud server could easily exceed $2,000 per month, which over a long period exceeds the cost of a new server substantially."

3. Collaboration and mobility: "interesting dichotomies"
Agrawal elaborated on those dichotomies: "On the one hand, there can be a completely SaaS application-based approach; but on the other, a more robust deployment has been on-premises or hybrid deployments. And mobility is essentially seamless and secure delivery of applications to multiple screens. This usually requires the deployment" of virtual desktop infrastructure or desktop-as-a-service. "And businesses from small to large that use VDI usually have to upgrade servers, storage, and network bandwidth. This opportunity may be in the form of tower servers, rack servers, and blade servers."

4. Internet of Things (IoT): server innovation catalyst?
Wait, what? Isn't the IoT all-cloud, all the time?

Yes, by definition, the IoT is kind of an online thing. But Agrawal expects the business of IoT to actually drive demand for new kinds of servers. "Granted, cloud is an important component for IoT, but with exceptional levels of security requirements and large amounts of proprietary data being collected, collated, and analyzed, it is difficult to imagine all implementation to be on cloud-based servers."

5. Big data: big server and storage needs
Another trendy topic, big data, is poised to force infrastructure upgrades as more companies give green lights to data-related projects.

"Big data initiatives in large enterprises put pressure on infrastructure and force server [and] storage upgrades," Agrawal said. "As proof-of-concepts get completed and move on to become full projects, businesses will spend more on compute and storage platforms as big data project deployments will require better and updated storage, servers, and other analytical solutions."

The bottom line: Cloud computing is changing the traditional server, but it's not eliminating it. "Businesses will continue to purchase servers, smaller-sized, energy-efficient performance servers with or without integrated storage and networking capabilities," Agrawal said. "Adoption of cloud servers will continue to increase but only for some workloads. The decision will come down to cost, security, comfort, [and] business objective."

Private clouds are moving rapidly from concept to production. But some fears about expertise and integration still linger. Also in the Private Clouds Step Up issue of InformationWeek: The public cloud and the steam engine have more in common than you might think (free registration required).

Kevin Casey is a writer based in North Carolina who writes about technology for small and mid-size businesses. View Full Bio

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jagibbons
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jagibbons,
User Rank: Ninja
6/4/2014 | 2:41:30 PM
Re: Hybrid factor
Cloud is rent/lease which means something in the backend has to be a server. Perhaps better optimized in a multi-tenant configuration, but a high-end box with software on it.

Sure, there is hardware, but it takes a lot less hardware for five to ten organizations to share tenancy on a single set of servers versus five to ten organizations buying all of the servers themselves.
Todder
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Todder,
User Rank: Moderator
6/4/2014 | 1:01:07 PM
Re: Hybrid factor
Whether you buy, lease or rent a car, in the end you still need the physical unit. Cloud is rent/lease which means something in the backend has to be a server. Perhaps better optimized in a multi-tenant configuration, but a high-end box with software on it.
jagibbons
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jagibbons,
User Rank: Ninja
6/2/2014 | 6:42:02 AM
Re: How to judge in an economy with a lingering recessionary influence?
Good points, Charlie. It's hard to know what the new "normal" will be until the economy recovers.
batye
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batye,
User Rank: Ninja
6/2/2014 | 2:02:38 AM
Re: Hybrid factor
it like keep upgrading just to survive from day to day... and no any other way... 
batye
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batye,
User Rank: Ninja
6/2/2014 | 2:01:35 AM
Re: this word always makes me giggle
good point... but like in everything else in life... end game is to see profit - one way or other...
Charlie Babcock
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Charlie Babcock,
User Rank: Author
5/30/2014 | 8:17:33 PM
How to judge in an economy with a lingering recessionary influence?
The cloud service providers have picked up some of the slack that would otherwise exist in server sales. They built data centers with thousands of server units, and the server vendors know how to cater to them. You can't really make a long term judgment yet on what server sales look like in the age of cloud computing because we haven't gotten back a normal, non-recessionary economy. Fuller utilization of servers through skilled operations -- in both the public cloud and private enterprise -- will tend to flatten sales in the long run, in my opinion.
techgurudude
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techgurudude,
User Rank: Strategist
5/30/2014 | 12:19:27 PM
this word always makes me giggle
Whenever I hear the word cloud used in the tech world it makes me laugh. We shouldnt polish it as a new thing, it only confuses consumers. The cloud is what it was from the beginning of the internet just webhosting with an addon.

 

And when you see major software companies getting into a space that has always been around barely squeezing profits you wonder if thats it and have reached the peak.
jagibbons
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jagibbons,
User Rank: Ninja
5/30/2014 | 10:09:46 AM
Hybrid factor
This data about server market growth isn't really suprising at all. The hybrid trend is a huge factor here. Many enterprises will want to run some applications or store some data locally for either performance or regulatory reasons. This requires continued investments, although at different levels, in processing and storage. These aren't all-or-nothing kinds of solutions.
Server Market Splitsville
Server Market Splitsville
Just because the server market's in the doldrums doesn't mean innovation has ceased. Far from it -- server technology is enjoying the biggest renaissance since the dawn of x86 systems. But the primary driver is now service providers, not enterprises.
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