The server market was in the midst of a renaissance in 2006, and many industry observers expected that to continue through 2007. As more organizations began adopting virtualization as a technology strategy, more server computing power would become a part of that mix. Coincidently, processing power has catapulted in intensity with the advent of multi-core technology. As a result, IT departments face an ever increasing need to upgrade existing servers. From a vendor or partner viewpoint, the question then arises of where do organizations purchase their servers?
While only 26 per cent of total server shipments were distributed through the reseller channel in 2006, the increasing demand for server technology is an opportunity ripe for the partner community in 2007. In Info-Tech Indaba’s Server Channel and Purchase Methods report, an estimated 52 per cent of total server PC purchases were conducted directly from vendors or original equipment manufacturers (OEM). While the system builder community would account for a chunk of those shipments, the effects of direct vendors such as Dell were ever present. Drilling down a bit further, however, we find that healthcare was one sector where the channel was increasingly popular. Channel shipments accounted for more than 35 per cent of total shipments, while direct shipments dropped to just below 50 per cent. Another sector where the channel enjoyed increasing popularity was the wholesale/retail segment, where again, channel shipments accounted for more than 35 per cent of total volume. Solution providers play an important role in point-of-sale (POS) environments, so it’s not surprising to see this kind of activity.
So, healthcare and wholesale/retail are two prime opportunities for the solution provider channel, but there’s also lies some room for making gains in other sectors. For example, the channel is relatively well received in the financial services sector and is also a viable option for organizations in business services, manufacturing, and primary industries.
Replacing existing servers is a popular trend, accounting for an estimated 38 per cent of total server shipments. While this is modest growth, the upwards direction speaks to the growing significance of server technology within organizations.
This isn’t too surprising when we consider the technologies coming down the pipeline for servers, and the amount of information we have to store on our systems. With trends such as virtualization, compliance and piracy, data management, and data storage a daily part of the IT department’s functions and responsibilities, the need to upgrade or purchase new machines is paramount. These factors, coupled with the industry forces, result in declining prices on servers. The competitive price points on the machines help IT departments justify the expenditure.
The other attractive feature of server technology is the multi-core processing technology, which boosts processing speeds, and the configuration of the machine itself, which enables users to truly “do more with less.” However, as the operating system and software programs intensify their processing power demands, new and improved server technology will be required.
Server demand is robust, and vendors and solution providers can benefit from opportune market conditions. Targeting the verticals with the greatest need for server technology is one approach to build client relationships and increase the opportunities for success.
Michelle Warren is a senior research analyst at Indaba Division of Info-Tech Research Group of London, Ont.
Comment: cdnedit@itbusiness.ca