Indian server market experienced another year of growth with the UNIX server market taking leap. India’s server market crossed $700 million factory revenue in 2007 with x86 Blade server shipments growing 103 per cent. Here, factory revenue represents dollars recognized by multi-user system and server vendors for ISS (initial server shipments) and upgrade units sold through direct and indirect channels.

According to IDC’s Asia/Pacific Quarterly Enterprise Server Tracker, 4Q 2007, March 2008 release, the overall Indian server market has seen a healthy growth as customers continued to refresh and expand their IT infrastructure.

During the year, the overall server market factory revenue grew by 24 per cent over the previous year (calendar year 2006) to touch $727 million. The unit shipments grew by 19 per cent to 135,615 during the same period.

Apart from traditional sectors like telecom, BFSI and manufacturing, the year also saw the emergence of retail and construction as key demand drivers.

x86 server market In 2007, factory revenues of the India x86 Server market grew by 24 per cent over 2006 to touch $414 million, while unit shipments grew by 21 per cent to 126,940 units during the same period. HP emerged as the market leader in x86 server market with 33 per cent market share which included both factory revenue as well as unit shipments.

The x-86 market, composed of both Intel and AMD configurations, increased to 107,000 in FY 07 from 131,000 in FY 08, a growth of 22.4%. According to industry experts, the growth has been more balanced over the year and across all segments and categories of x-861P, 2P, 4P, and blades, predominantly in the 2P and 4P categories. However, vendors say that 1P grew most in India with a lot of technology intake in the mid-market.

According to Amit Dalal, Analyst, Enterprise Computing Products Research, IDC India, “The blade server market continued to be the hot segment for x86 servers during 2007. The market was abuzz with initiatives like ramping up of product portfolios and education of customers through events and contact programmes. These programmes demonstrated product benefits like hot swapping, reducing redundancy and reduction in cabling, power and space requirements.” HP was followed by IBM which occupied 28 per cent market share.

Indian Non-x86 server market Factory revenues of the country’s non-x86 Server market grew by 24 per cent year-on-year to touch $313 million in 2007. IBM emerged as market leader in the India non-x86 Server market with a 38 per cent share in 2007.

The market was driven by the expansion plans of major telecom service providers and BFSI sector. This helped the market to cross the $100-million mark for the first time in a single quarter during the 4Q 2007 (October-December 2007).

The non-x86 UNIX market, experienced good growth over the year. HP is the leader in terms of revenue in the RISC/EPIC space with around 49% market share. In terms of number of units HP has a close to 23% share. For UNIX HP leads with 40.7% in revenue and has a unit share of close to 17%. HPs non-x86 segment witnessed good value traction across its three non-x86 categories: HP UX, Open VMS and Non-stop server ranges.

IBM has also done well in the UNIX space. It saw impressive demand from the telecom vertical with wins like Vodafone, Bharti, and Idea. In mainframes, IBM inked a deal with ELCOT. On the high-end computing environment, its Bluegene systems went in for compute intensive application scenarios.

As computing power requirements increases, both x-86 and UNIX have started playing a complimentary role. Thanks to computing power, the integrity of Windows/Linux has considerably increased, leading more people to run mission critical apps on the x-86 architecture. However, UNIX is the preferred platform choice for big enterprises with several sites and ERP and core banking apps.

SMBs to Drive India Server Spend A recent study conducted by Access Markets International (AMI) Partners has thrown up some interesting figures for the Indian Server market. The New York-based research firm says that small and medium businesses (SMBs or companies with up to 999 employees) in India are set to drive more than 20% growth in server sales. This becomes significant as the overall server market slowdown remains a distinct possibility in 2008.

AMI estimates that the increase in the number of units shipped in the SMB segment will primarily be driven by the expansion of new distributed computing workload deployments. AMI ha predicted a healthy 15 per cent growth in this segment.

“Server technology is constantly evolving to keep up pace with ever-changing business requirements and expansion needs of the SMBs,” said Partha Sarathi Sengupta, manager (Strategic Market Analysis) at AMI Partners. “There is hardly any possibility of spending growth rate to drop significantly in the coming year - as the industry is in the phase of rapid infrastructure upgrades.”

Virtualization Ahead 
According to IDC’s Worldwide Quarterly Server Virtualization Tracker, worldwide virtualization license shipments in the second quarter of 2008 (2Q08) increased 53% year over year, compared to a 72% year-over-year increase the previous quarter. The x86 server market led the way with 60% year-over-year growth followed by the EPIC server market with 18% growth. Worldwide CISC and RISC server virtualization licenses declined 15% and 7% year over year, respectively.

Quarterly totals of x86 server virtualization licenses continue to experience healthy growth, although the growth rates have slowed over the last four quarters. The modest decline in growth rates indicates that the market is showing early signs of maturation.

The virtualization platform providers are going to have to adapt their go-to-market strategies to this ever-changing dynamic, as new growth opportunities open up around new deployment of virtualized servers not specifically targeted at consolidation, and at new customer segments such as midsized companies. Worldwide new server shipments virtualized increased 52% year over year in the second quarter, compared to 70% growth in 1Q08.

Worldwide virtualization software revenue grew 15% year over year in 2Q08, compared to 32% growth in the first quarter of 2008. The growth in virtualization software revenue primarily came from the x86 server market, which grew 39% year over year. EPIC virtualization software revenue also increased year over year, albeit at a slower pace of 9%. IBM has announced that over the past 10 years, it has gone from also-ran to first place in the Unix server market, claiming 35 percent of the $61 billion market in 2008 to Sun’s 29 percent share.

According to IDC, Linux server growth has been outpacing Unix server growth for some time, with Linux gaining more than a full percentage point of market share to land at 13.4 percent market share earlier this year.