A hundred thousand units in 2006

Commoditisation of the x86 market and the need to consolidate will catapult the Indian server market to the second position in the Asia Pacific this year, says Akhtar Pasha

Business depends on technology, and this aptly explains the growth of the Indian server market in 2005. The primary reason? Servers being the fundamental building blocks of a solid infrastructure, the segment is attracting heavy investments.

x86 servers particularly saw phenomenal growth, and the market doubled both in unit shipments and factory revenues in 2005. According to IDC India, the x86 market grew by 42 percent to 89,193 units vis-à-vis 62,751 in 2004. In factory revenue terms, the x86 market grew by 46.1 percent to report $284.97 million.

Says Dinender Sharma, Manager, Computing Products and Channel Research, IDC India, “Total branch automation, core banking applications in finance & insurance, government purchases (DGS&D included), IT services, and SMB buying are responsible for the impressive run rate in the business. These were major driving forces for the market growth in 2005, and will continue to be the mainstay of demand in 2006.”

A look at the x86 offers interesting insights. Sharma goes on, “Two-way servers continued to carry the market, growing 57 percent (in units) from 2004 to 67 percent of total x86 shipments in 2005. These machines along with 4-way (that grew by 81 percent in unit terms) servers will continue to spur market growth as demand for 1-way systems saturates. The market also witnessed some interesting channel schemes. IBM offered one ThinkPad with every server purchased by a channel partner, and in another scheme one Ford Ikon with every 100 servers. Dell’s Crazy Server offer in the AMJ quarter of 2005 with heavily discounted prices for a particular model had a significant impact on x86 server growth.”

In terms of leading x86 server vendors, IBM remained at the top with a marketshare of 34.2 percent by factory revenues in 2005. However on the basis of unit shipments, HP was the clear winner.

AMD’s Opteron server business has grown five times (by units) if we leave out the 1-way Celeron/PIII/PIV/P-D/ shipments and just compare AMD’s Opteron server shipment vis-à-vis Xeon server shipments in 2005 versus 2004. Xeon server by processors grew by 61 percent in the same period. However, AMD [Opteron] growth is higher because it is growing from a small base and has made significant inroads in the x86 server market.

Mukund Ramaratnam, Director, Marketing & Business Development, AMD Far East (India) says, “Q4 05 has particularly been big for AMD. We have won significant deals—WesternGeco, the world’s largest seismic company that uses high-end applications for data processing, is using Opteron dual-core blade servers.” Other deals were Texas Instruments, SBI, ICICI Bank and HDFC Bank.

"Of the total x86 servers we sold in 2005, 60 percent were on Linux and Windows, the rest were on Solaris. We are gunning for the number 4 slot in the x86 server market" -K P Unnikrishnan Marketing Director Sun Microsystems India

Sun Microsystems is making its presence felt in the x86 market. In 2005 it sold approximately 7,000 units of AMD servers. K P Unnikrishnan, Marketing Director, Sun Microsystems India says, “Of the total x86 servers we sold in 2005, 60 percent were on Linux and Windows and the rest were on Solaris. We are gunning for the number 4 slot in the x86 server market.” Sun has made some gain into newer bases such as Air Deccan, Max New York Life, NIC, HDFC, Cisco, Veritas, Cadence and Texas Instruments. Big businesses have also started buying x86 from Sun.

There has been dramatic development in blade servers, which saw exponential growth to 3,680 units in 2005 over 1,055 units in 2004, reflecting a three-fold growth. Sharma of IDC adds, “Blade servers wrote another success story that was expected to sustain. That’s because of the value blades offer—occupying less physical space, and being power-efficient, flexible and easier to manage. These features have resulted in some of the biggest buyers such as WesternGeco using blades in seismic applications for the oil and gas industry.” IBM swept the market with 2,650 units—that’s a cool 72 percent maketshare—in 2005.

IBM also topped the Linux server shipments with 6,000 units out of the total market of 18,000 units in 2005. Linux server shipments increased exponentially supporting more applications in commercial and technical workloads.

With regards to Unix server shipments by OS, IDC statistics reveal that Unix server spend is slowing down. The Unix server market grew by 10.7 percent in factory revenues to $191.52 million, shipping 8,633 units. Telecom spending (billing and new applications), BFSI (core banking and business applications), manufacturing (business applications) and educational (for HPC-high performance computing) drove the Unix server market in 2005 in India.

Sun continued to dominate the RISC/Unix market server market in 2005 with 55.6 percent marketshare by unit shipments, which was more than double that of its closest competitor. In factory revenue terms it was a different story; here IDC says Sun holds joint leadership with HP—Sun has 33.7 percent marketshare vis-à-vis HP’s 34.3 percent marketshare. (To qualify to be a leader the difference should be of at least 1 percent.) Comments Sharma: “IBM at the next spot showed the highest growth riding on the success of its Power5 systems.”

A surprise package in the Unix server market is the way the IBM marketshare has grown. Jyothi Satyanathan, Country Manager, eServer pSeries, IBM Systems & Technology, IBM India says, “Three years back we did not have a happy story to tell [with Power4] and had product disadvantage. But year 2005 was riding on the success of Power5 (p5, eServer pSeries). We were behind HP with 20 points but have narrowed that gap with just 2-3 points in 2005. Today we are present in most telecom accounts.”

Commoditisation of the x86 server continues...

"x86 servers have become industry-standard servers. They are the best price-to-performance servers" -Pallab Talukdar Director Enterprise Marketing & Alliances Customer Solutions Group HP India Sales

From desktops to printers, all continued to get commoditised, and servers were no exception. Growth in x86 server revenues primarily came from 2-way and 4-way server shipments, with 1-ways getting flattened. Notes Viswanath Ramaswamy, Country Manager, xSeries, IBM India, “From a form factor perspective we have seen customers moving from tower models to rack-mountable servers as there has been an increase in the number of x86 servers each organisation is buying. Also, 2-way servers comprise the largest chunk of servers shipped out to the market. However, blades have definitely taken up some share of the pie from the 2-way rack-mountable servers.” IDC states that IBM’s success with x3 servers among 4-way has commoditised the x86 market.

Adds Sam Oommen Thomas, Assistant General Manager, Marketing Enterprise Product Group, Acer India, “The key factor for the growth of the 2-way server market was the decreasing average sales per product and the increasing sophistication of IT implementation. In the 4-way server market too, with the introduction of the low-cost Xeon MP processor, the platform became affordable to many organisations.”

Additionally, mid-size businesses deployed collaborative, messaging, ERP and other business applications that fuelled the market further. “It was the combined effect of compute-intensive applications being handled by x86 64-bit (4-way) servers and prices becoming reasonable.

Pallab Talukdar, Director, Enterprise Marketing & Alliances, Customer Solutions Group, HP India Sales says, “x86 servers have become industry-standard servers. They are the best price-to-performance servers. The growth that we have seen in the x86 market suggests that the Indian market has matured—more applications are being added and customers are demanding more headroom for growth—that’s why they are buying 2-way and 4-way servers.”

There are instances where large data centres that bought Unix servers are now replacing them with x86 servers (in HPC). Texas Instruments, which has been using EDA application on UltraSPARC on Solaris, is using HP’s AMD server running Linux. “Businesses are making intelligent decisions and long-term investments in x86 servers,” adds Talukdar.

2006 will be the year of virtualisation

Major server consolidation was noticed in 2005, and the market is not short of examples. Aviva Life Insurance has done physical (for all applications) and virtual server (at DR site) consolidation using IBM 8-way x445 and x446 servers. Sanyo has gone for physical server consolidation using IBM’s BladeCentre HS20 that runs SAP applications and Microsoft Exchange. Karvy Consultants, which has deployed multiple applications and an SQL server, has gone in for consolidation using HP 4640 (4-way) and 8-way servers. Eureka Forbes, India Oxygen, Oil India, indiatimes, Sify, and Reliance Infocomm have also gone in for blade server consolidation using HP servers.

CIOs/IT heads who have delayed virtualising their x86-based servers for fears that the technology is still unproven should put that project at the top of their to-do lists for 2006 as the market for virtualising low-volume systems heats up. It’s a combination of various factors—the x86 platform becoming powerful, and customers finding a growing list of applications appropriate for a virtualised environment. In the last couple of years, server vendors have increased the performance of their low-end systems with dual-core processors and a 64-bit extension. This year will bring servers with virtualisation technology built into the silicon itself—a huge step for the x86 platform.

“2005 saw a lot of enterprises dabbling with virtualisation in HPC, EDA, core banking and the like, particularly for server consolidation and cost-savings,” observes Talukdar. “What is surprising is the speed at which virtualisation has moved into production environments.”

IDC says the shift to x86-based server virtualisation is underway, and expects widespread adoption to take place during the next couple of years. Companies lacking a virtualisation strategy for low-end systems will pay more in the long run in hardware costs and management headaches, say analysts. They add that x86 servers running a single application have poor server utilisation rates (about 20-25 percent). Using virtualisation to consolidate workloads into a single box should increase utilisation significantly.

Server management tools help end-users to easily move and copy virtual servers, providing a simple approach to disaster recovery and high availability. But advanced capabilities—such as a faster and seamless migration of virtual servers among physical systems—are likely to come in the months ahead.

Blades & Linux move to deployment phase

Blade servers have definitely proven themselves and have gained a momentum in the Indian market. Ramaswamy of IBM is aggressive: “We are expecting blade server shipments to be at least 20 percent of the total x86 server shipments by the year 2008. Blade servers are the best example of physical consolidation of servers, which is one of the emerging trends in the x86 server segment.”

Blade servers provide manageability like no other standalone servers. Apart from this, increasing the number of x86 servers inside the data centres with lower resource utilisation have forced customers to think about consolidation which is implemented by using virtualisation software. Says Talukdar, “Physical and virtual server consolidation is expected as we move into this year and it will be more prevalent in data centres.”

In 2005 the market saw some big moments in Linux server deployments. HP won major projects such as the one from the Tata Institute of Fundamental Research, which is a one-teraflop installation with 78 nodes in cluster (based on Itanium2). At the Institute of Genomics & Integrated Biology, a four-teraflop supercomputer is using HP XC3000 HPC cluster with 288 nodes based on dual-Xeon ProLiant servers. Texas Instruments, Ashok Leyland, and the Naval Physical & Oceanographic Laboratory are other organisations using AMD with Linux. HPC, oil & gas, manufacturing, EDA and pharma are driving this market too.

Businesses are deploying Linux servers to reduce the total cost of ownership as Linux helps. The Indian Linux server market has moved from the trial phase to the deployment phase. Nevertheless, Talukdar points out that “though we have seen quite a success in the Linux server space, corporate acceptance of Linux servers is limited. It is the same for edge networks running mail servers or security appliances. Linux is not commercially accepted in the market.” Still, the Linux server market that grew to $75 million in 2005 will continue to grow in 2006 as well.

Unix servers slowing down but will bounce back

In 2005, the Unix market saw big spending by Reliance Infocomm, HDFC, TTSL, BSNL, Bharti, ICICI Bank, Punjab National Bank, Corporation Bank, UBI, SBI and seven subsidiaries, Ashok Leyland, IDBI, the Department of Company Affairs, ABN Amro, Shoppers’ Stop and others. And some of them place orders quarter-on-quarter on a regular basis.

Express Computer believes that the Unix server market is not slowing down as reported. There are some statistics shown by Unix server vendors which prove that the market has grown bigger than last year. Agrees Unnikrishnan of Sun, “The deals that were closed show that the Unix market has grown much more than what has been reported.”

But if we look at pure numbers, the Unix server market is slowing down. Sharma of IDC says, “Non-x86 servers, in contrast [with x86], revealed a comparatively lower growth in 2005 primarily due to a slowdown in the RISC segment.”

Adds Talukdar, “Windows servers are eating into the Unix market. Traditionally, large businesses have deployed Unix servers for core applications inside data centres. New applications and value-added services such as Internet banking, ATM, prepaid applications (seen in telecom) are coming to Windows servers. Tata Teleservices, ITC and Oil India are key examples in this regard.” He however believes that Unix will be prevalent in manufacturing, telecom and BFSI.

Satyanathan opines that the lull in the market is temporary. This is because in the last 2-3 years businesses were buying as the economy bounced back. But “it will improve from here on and we expect it to grow by 14 percent in 2006.”

"We have won significant deals. WesternGeco, the world’s largest seismic company that uses high-end applications for data processing, is using Opteron dual-core blade servers" -Mukund Ramaratnam Director Marketing & Business Development AMD Far East (India)

"2005 was riding on the success of Power5. We were behind HP with 20 points but have narrowed the gap. Today we are present in most telecom accounts" -Jyothi Satyanathan Country Manager eServer pSeries IBM Systems & Technology IBM India

Multicore means paradigm shift

Multicore is certainly the flavour of the season—Xeon, Opteron, UltraSPARC T1, Power. Agrees Sharma, “With multicore servers already introduced in India, there are exciting times ahead for the server market.” The multithreaded architecture debate came about on account of the UltraSPARC T1 launch, and it is certainly an interesting approach to overcome barriers to better computing without pushing the thermal envelope. It needs to be said that multithreaded CPUs deliver outstanding performance in specific application environments (Web serving and so on) where multiple threads can be serviced independently. Declares Thomas, “Multicore is here to stay. Multithread is more a case of ‘horses for courses’.”

Express Computer says that the multicore architectures of server vendors are different from each other, and it is difficult to say who’s best because the architecture in itself has advantages.

IDC believes that the move to multicore processor design is a paradigm shift that addresses serious problems emerging for single-core designs. The old paradigm, which provided two decades of performance improvements, held that the best design was a powerful single-core processor and all of the available transistors were budgeted to this goal. In the new paradigm, simpler cores that manage multicore threads not only reduce power and heat but improve overall throughput by addressing the memory latency directly. Transistors budgeted for large caches, out-of-order executions and perfecting have been put to other uses. These functions are unnecessary in a multicore multithreaded processor architecture.

At a time when Intel, AMD and IBM are going dual-core, Sun has gone truly multicore—eight cores with the UltraSPARC T1 processor; since each core is capable of executing four threads this makes it 32 threads.

Comments Anil Valluri, Country Director, Client Solutions Organisation, India, Sun Microsystems: “Multicore, multithreaded processors can achieve higher throughput because they provide better balance between processor clock speeds and memory access latency. Without multithreading, processor clock cycles are often wasted while the faster processor waits for data to arrive from memory.” He adds that UltraSPARC T1 consumes less electrical power (73 watts at processor level), and that the cores in the UltraSPARC T1 processor are interconnected with 132BG/sec crossbar switch; there is a 12-way associated 3 MB Level-2 cache on the chip. Four DDR2 channels delivering 24BG/sec of memory bandwidth are available to interconnect with RAM. “Performance per watt is emerging as a key metric when choosing the right servers to meet the workload of the enterprise, as well as fit the data centre challenge of increasing IT utilisation.”

Virtualisation is going to be the buzzword in 2006. Intel responded to AMD’s ‘power consumption’ challenge by daring it with ‘virtualisation.’ With the advent of dual-core (and shortly quad-core and higher) CPUs, virtualisation is a natural corollary. Intel’s next generation, Intel VT, or AMD’s Pacifica, is going to be a popular demand across verticals in 2006.

States Ramaratnam: “Rev F, AMD’s next big release due in mid-2006, is undergoing major core changes. You will see migration to DDR2 memory and Pacifica (virtualisation) and improved security.” It will be a move that will end the single-core server processor era and pave the way for four-core models. All Rev F models will be dual-core chips and accommodate quad-core Opterons scheduled to arrive in 2007.

Surender Arora, Director, Customer Solutions Group, Intel India, says that by 2006- end the company is expecting 95-100 percent of its shipped servers to be on multicore. He adds the next big release will be the Intel Bensley server platform that will be available in April 2006 and give extreme performance.

The Bensley platform is designed for the Dempsey and Woodcrest dual-core Xeons. Using the new Blackford chipset, it is designed to support 1066 MHz FSB (Front Side Bus) for the fastest Xeons. Dempsey will come in 1066 and 667 MHz FSB varieties with a power consumption of 130 W on the faster parts and 2 MB independent L2 cache (for a total of 4 MB). A big bottleneck for Xeons has been the 533 MHz FSB for a long time, but this has now been doubled giving the Xeons a lot of headroom.

“With the introduction of Power6 based systems in 2007, IBM will deliver high performance chips featuring an unprecedented combination of performance and power management capabilities, with top clockspeeds of 4.2 GHz,” says Satyanathan.

Most importantly, Power6 will operate within a comparable ‘power envelop’ as competitive chips from HP and Sun even as it sets new standards for microprocessor performance. With Power6 IBM will successfully address today’s performance/power challenges, establishing a new benchmark for advanced circuit design and systems on a chip integration.

Strong economic growth in 2006 will be one of the key underpinnings of healthy IT infrastructure investments, including those in servers in the short to mid-term. Advances in 64-bit, dual-core, and virtualisation technologies will fuel growth in the enterprise computing and server market. As per IDC India, the server market in the country is expected to cross the 100,000-unit shipments mark in 2006 for first time ever. The milestone will enable India to supersede Australia as the second-largest server market in APEJ in unit shipment terms.

akhtar@expresscomputeronline.com