EU SMBs to spend high on servers

KOLKATA, INDIA: Small and medium businesses (SMBs, or companies with up to 999 employees) are on track to spend around US$7.6 billion on server and networking hardware across the Western Europe region this year.

Out of a total of eight countries that comprise the Western European region (France, Germany, U.K., Denmark, Finland, Italy, Norway and Sweden), the three key ones are France, Germany and UK. These three countries will account for more than 50 percent of Western Europe’s total server and networking hardware spend in 2008. This is according to a recent study by New York-based Access Markets International (AMI) Partners, Inc. 

“About 66 percent of the expenditure will come from SBs (small businesses, or companies with up to 99 staff) in France, Germany and the UK,” says Mithu Sinha Saha, analyst at AMI-Partners. “Server spend will account for up to 56 percent of the total spend, while networking hardware will comprise the rest.” 

Server spending in the three key countries is set to grow 5 percent in 2008. A recent AMI study further reveals that in France and Germany, more than 22 percent of SBs have bought servers for the first time, mainly due to increased data storage needs by SBs, rise in staff strength and better management of corporate data, especially among MBs (medium businesses, or companies with 100 to 999 employees).

“A larger proportion of SMBs prefer to buy dedicated servers in the three key countries,” Saha says. “The most significant reasons for purchasing dedicated servers are their high performance and greater reliability. A lesser proportion also buys desktop and workstation servers, mainly because these servers are suitable to cater to the SMBs’ existing workload requirements. Lower cost is another key driver.” 

Blade servers are anticipated to account for one fourth of all servers sold in Western Europe in 2009. While both revenue and volume growth rates across the worldwide server market have been moderate, the market for blade servers is gaining strength. SMBs in the three countries are also becoming aware of the benefits of blade servers, such as higher efficiency and performance, less space and power consumption, etc.

Over 40 percent of SMBs in U.K. are planning to buy network/blade servers—this is the highest within the three key countries. “Usage of high-end server technologies like server virtualization solutions is also on the rise in Western Europe,” Saha says. “This is more for MBs. Windows Server 2003 is the most popular network operating system in Western Europe and Windows 2000 ranks second highest, while Linux is also gaining recognition.” 

Networking hardware is an essential infrastructure requirement for SMBs. In the three countries, SMB spend on networking hardware (including LAN switches, NIC cards and cabling, routers and wireless LAN) is set to rise 8 percent in 2008 over 2007. LAN switches will take up the lion’s share in this space. 

Having a LAN is a necessity for adoption of technologies like virtual private networks (VPNs) and wireless LAN (WLAN). “More than 50 percent of SMB LAN businesses in Germany deploy a wireless LAN, higher than in France and the U.K.,” Saha says. “VPN usage among SMB server businesses in Germany is approaching the saturation point. France and the U.K. also enjoy healthy penetration rates. However, the growth rate of VPN usage shows an increasing trend, while WLAN usage growth rate is on the decline in the three key countries.”