Govt, education sectors contribute to Indian server market

KOLKATA, INDIA: Although the server market had dipped, especially in the second half of 2008, the government and education sectors have emerged as a strong opportunity pocket in 2008. The government and education sectors control over a fifth of total server spending, according to a new server report by AMI-Partners.

“This proportion has every possibility to increase in 2009 as the government is showing keen interest in strengthening its defense mechanism in light of terror threats,” says Partha Sarathi Sengupta, manager, Strategic Market Analysis at AMI. “There has been lot of e-governance-related activities happening in various cities, and government contributions to the server market were significant—especially in cities like Hyderabad, Delhi, Chennai, and among Tier II cities like Chandigarh, Jaipur and Cochin.”

The bleak economic situation has led companies to re-evaluate their budgets and review criticality and timelines of IT projects, the study finds. “Businesses in recent years have been buying only the IT infrastructure they need, and they don't have unused IT infrastructure equipment sitting around,” he said.

Enterprise software implementation dropped in the second half of 2008 and this has affected server traction. The UNIX market has remained healthy, controlling nearly 40 per cent of the revenue share, whereas x86 growth declined in the second half of 2008.

IBM retains the lead in the overall server market controlling nearly 38 per cent market share, closely followed by HP. But Dell, especially in Western and Eastern regions of the country, has grown robustly. IBM lost market share to Dell in the last half of 2008 in x86 space. Dell PowerEdge 2900 and 2950 are competing with IBM3400 and HP ML350 in the entry-level bracket. Lenovo’s entry in the server market may lead IBM to discontinue manufacturing of its entry-level X-series servers and directly compete with Lenovo.

Blade server is making strong inroads in the traditional tower and rack market. Small and medium businesses (SMBs) would open up a huge opportunity for Blade servers. They are buying rack-mount, Blade server and storage arrays all in the same chassis. Delhi, Mumbai, Bangalore, Chennai and Pune have already a substantial market share of blade servers. IBM has a better hold in the Blade space.

There has been a higher degree of adoption of 4 socket servers. Server consolidation and virtualization are driving the implementation of 4 socket servers. But given its price and performance, UNIX servers are likely to get replaced by x86 4P servers. In the second half of 2009 4P will see major traction in the market.