Server Blade Market Is On The Rise By Daniel Fleischer, IDC

The server blade market in 2005 topped $2 billion for the first time, growing by 84% over 2004. Blades remain the main growth area in the server market and remain at the forefront of IT and data center managers in most surveys. Today we have reached a turning point in the adoption of server blades. Most early adopters have now deployed blades, and the challenge lies in how to reach into new verticals, application types, and markets such as small and medium business (SMB). Many problems must be resolved to demonstrate the blade value proposition and therefore stimulate adoption in new user groups. As Margaret Thatcher once said, "What is success? I think it is a mixture of having a flair for the thing that you are doing; knowing that it is not enough, that you have got to have hard work and a certain sense of purpose!" We have today put the building blocks in place and are positioned well to fuel further market growth. However, we must focus continually on execution to realize this potential.

Simplification is the driving force behind most enterprise IT purchases today. Demands on the data center exploded in-line with scale out strategies, and operating expenses (OpEx) increased accordingly. Reducing OpEx is now a focus of both users and vendors. Blades can play a key role here, having been designed with management in mind from the ground up. However, we still need better management tools, and vendors have certainly picked up on this.

Management is key for blades to deliver on their promise. Indeed, we expect vendor offerings to be differentiated at this level looking forward. Automation has remained a major value proposition in efforts to reduce OpEx. The ability to manage multiple systems at the click of a single button is certainly compelling. When combined with virtualization and redundant pools of server blades, it makes for a powerful story. Users do not want to have to learn and use multiple consoles with varied characteristics and terminologies to perform simple management operations.

Today's blade deployments remain project based, focused around key verticals within large enterprises. We typically see blade infrastructure, such as the chassis, pre-deployed to allow rapid scaling as required. As the next refresh cycle picks up steam, we expect replacement of traditional rack-optimized systems when the value proposition is proven in working environments. The development of reproducible integrated solutions along with dedicated channel education will also assist growth through SMBs.

Ultimately, new infrastructure purchases will be application-driven as users look to IT to solve business problems. With this in mind, we must create an ecosystem around blades, such as we are trying to do at the Server Blade Summit! Certainly in Europe we are seeing vendors partner with ISVs to develop true "Utility Computing" solutions. They will ensure maximum ROI, as well as the unified approach users want.

Standardization also will play a major role. Customers are looking for industry standard solutions that fit into the now commonplace multivendor environments. Although we do not expect to see standards based blade chassis near-term, installations are likely to have multi-vendor chassis offerings with standardized management. We do today see a sustained trend towards industry standard based solutions, including migration from proprietary RISC/ Unix servers onto x86 systems. Blades make an excellent platform on which to base such projects!

Price point remains an issue with ROI being an important metric. Investment protection is a major factor due to multiyear project life cycles. The blade market remains immature, and is still in a period of mergers, acquisitions, and failures. Business pain points are driving IT demand. Pricing alone is insufficient, and vendors will differentiate at the management level with blades being an essential technology platform.

The interconnection mechanism involves choosing from a crowded field. There are many candidates, including InfiniBand, PCI Express, and Gigabit Ethernet. None has much of a track record. It will surely take several years for a shakeout to occur. So far, Ethernet and PCI Express look like winners due largely to familiarity and wide use in other applications.

Peripherals are a further problem. One needs to monitor blades remotely, presumably through a KVM (keyboard-video-mouse) system. One also needs to share storage, presumably through a SAN, to reduce overall costs. As usual, the reality is more complex than the idea. And scalability is an issue, since most KVM systems can handle only a few devices.

Power and cooling are presenting blade users with significant problems. Certainly today's data centers cannot handle completely filled racks. Is it cheaper to retrofit or build new facilities? Surely all new ones should take high-density blades into account. Ever-increasing energy costs have a major impact here as well.

Upper management continues to put great pressure on data centers to cut costs. Indeed, we expect IT budgets to remain relatively stagnant. Since OpEx now accounts for around two thirds of total server spending, it is a logical place to focus on for cost-reduction. Consolidation has been the solution of choice, reducing both the physical number of systems and management applications. Looking forward, virtualization will become tightly integrated in the x86 space, nowhere more so than in the blade market where one can assign servers in small modular units.

The future for blades is bright despite the many challenges. IDC forecasts the market to reach $9.6 billion by 2009, representing a compound annual growth rate of over 350%. Please take this opportunity to trade ideas with colleagues and gain new perspectives during presentations from a wide variety of large and small companies. Learn about hardware, software, interconnect, and applications. You will hear from well-established companies such as AMD, Hewlett-Packard, IBM, Intel, Broadcom, Cisco Systems, EMC, Fujitsu-Siemens, IDT, Liebert, APC, Brocade, QLogic, Samsung, and Tyco, as well as highly touted newcomers such as VMware, Virtual Iron, Altiris, KeyEye Communications, Verari Systems, Cassatt, XenSource, and many others. If you want to be successful designing server blades, creating products for them, or applying them in data and telecom centers or elsewhere, don't miss this year's Server Blade Summit. See you there!