hyperscale servers ride cloud momentum into the enterprise

TBR

T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .

Sept. 30, 2014

Hyperscale Servers Ride Cloud Momentum into the Enterprise

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TBR Quarterly Webinar Series | 9.30.14 | www.tbri.com | ©2014 Technology Business Research Inc.

Hyperscale Servers Ride Cloud Momentum

Christian Perry

Senior Analyst and Content Manager, Data Center

Email: [email protected]

Twitter: @ITwriter

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mailto:[email protected]

TBR


Enterprise IT challenges are driving customers to seek alternatives to traditional infrastructure, but adoption challenges remain

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• Enterprise IT customers are seeking

infrastructure alternatives.

• Early enterprise-level adopters of hyperscale servers have plans to accelerate future adoption.

• Challenges remain for hyperscale server vendors to improve the customer experience.


TBR


TBR Position Competition will quickly rise in this market as cloud-driven computing concepts trickle into the enterprise market. TBR estimates a $1.7 billion U.S. addressable market in the next 12 months for hyperscale servers among organizations with 500 or more employees.

Hyperscale server vendors will follow the influence of cloud into enterprise data centers to tap a $1.7B U.S. market

The Situation The advent of cloud computing continues to shape the market for IT infrastructure. As customers gain more experience with public cloud offerings such as IaaS, they increasingly seek similar cloudlike benefits in their environments.

The Change Customers running cloud — and other — workloads are beginning to replace a portion of their traditional servers with hyperscale variants that are more power-efficient and easier to manage at scale. Just as organizations deploy private clouds to obtain an on-premises cloud experience, data centers are deploying hyperscale servers to obtain a cloud experience on the hardware end via easily added and managed capacity at potentially lower cost.

Cloud Enterprise

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TBR


Cloud workloads are sparking an IT infrastructure transformation as data centers look to cut costs across large server deployments

Today’s data centers increasingly run cloud-driven workloads.

Cloud data centers recognize traditional bulky, power-hungry server architecture is not cost-efficient.

Hyperscale server vendors deliver infrastructure that is simple to manage, easy to scale and efficient from power and cost perspectives. This drives sales of hyperscale server infrastructure into cloud data centers and enterprise data centers looking to cut physical infrastructure costs and reduce complexity.


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TBR


Enterprise customers are seeking highly scalable server architecture and prompting server OEMs to adjust their business models to meet demand

Enterprise customers are changing the early hyperscale landscape and creating opportunity for server OEMs outside of the cloud service provider market.

HYPERSCALE SERVER ECOSYSTEM

SCALE

SIMPLICITY

POWER SAVINGS

FLEXIBILITY Massive server

deployments create requirements for

custom designs that save on space, power

and TCO.

CHOICE Enterprise customers

want new server architecture that is easy

to purchase, deploy, scale and manage.

SHARED BENEFITS


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TBR


Custom

The rigid requirements of cloud-scale data centers created a massive market for custom hyperscale servers, delivered by providers such as Dell DCS, Quanta and Wistron (and now HP, with its newly formed joint venture with Foxconn). These engagements will remain tied to massive cloud deployments in service providers and a handful of very large enterprises that run workloads with cloudlike attributes.

Off-the-shelf

Concepts borne in cloud environments, including low-power, simplified physical designs and streamlined management, are infused into off-the-shelf server designs from Dell, HP and IBM. Although these products are technically appropriate for cloud-scale data centers, they represent the base on which server vendors will penetrate enterprise data centers and displace traditional x86 servers.

Unlike most traditional x86 server infrastructure, hyperscale customers can choose between custom and off-the-shelf server products

Primary target: Cloud Secondary target: Enterprise

Primary target: Enterprise Secondary target: Cloud


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TBR


• Compared with other attributes, purchase price and total cost of ownership are not fully matching customer expectations.

• Hyperscale servers have a market perception as cloud-only products. Enterprise customers may not see the value for their environments.

• Some adopters think they could have received roughly the same benefits from their existing x86 architectures.

Barriers to adoption

• Develop case studies that show real-world value for hyperscale servers. Customers need proof that the deployments will save them money.

• Illustrate the value of delivering services in hyperscale deployments. This is a key differentiator for server OEMs, and it boosts overall value.

• Customers are willing to replace traditional x86 servers with hyperscale servers. Develop strong use cases for those replacement opportunities.

Messaging to unlock opportunity

Moving ahead, hyperscale server vendors can unlock market opportunity by showing real-world value across cloud and enterprise environments

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TBR


Although customers are generally satisfied with hyperscale performance, opportunity remains for vendors to match expectations

By and large, hyperscale server customers are satisfied with the performance of workloads on the architectures they purchase. However, primary workload targets such as cloud hosting do not receive the same satisfaction as other workloads, such as storage. As the cloud hosting market expands, vendors have an opportunity to better meet customer requirements to gain market share.

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TBR


Customers are open to adopting ARM-based hyperscale servers

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7%

51%

23%

5% 15%

0%

10%

20%

30%

40%

50%

60%

Extremelylikely

Somewhatlikely

Somewhatunlikely

Extremelyunlikely

Not sure

Likelihood to Purchase ARM-based Hyperscale Servers

n=74SOURCE: TBR HYPERSCALE SERVER LANDSCAPE, MAY 2014

• TBR anticipates ARM-based hyperscale servers will play a role in the market later in 2014 as HP, Dell and SeaMicro increasingly release ARM-based products.

• TBR believes adoption of ARM-based servers will pick up as more software is designed to work with ARM processors.

• In turn, this will allow for a smoother migration from x86 to ARM and enable organizations to reduce IT complexities as well as generate cost savings from lower-power chips.

TBR


Hyperscale customers plan to increase adoption

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• Over the next two years, 30% of respondents expect to purchase more hyperscale servers than in previous years, while only 16% plan to purchase more blade, rack or tower than purchased in previous years.

• TBR believes this reflects growing demand for hyperscale servers at the expense of demand for traditional x86 servers, reflected by 29% or more of respondents indicating they would purchase fewer traditional servers over the next two years.

9% 7% 6% 9%

30%16% 16% 16%

43%

47% 42% 41%

19% 29% 36% 34%

0%

20%

40%

60%

80%

100%

Hyperscalen=188

Bladen=153

Rackn=163

Towern=146

Server Unit Purchase Expectations Over the Next Two Years

Will buy fewer than previous years Will purchase about the sameWill purchase more than previous years Not sure

SOURCE: TBR HYPERSCALE SERVER LANDSCAPE, MAY 2014

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TBR Quarterly Webinar Series | 9.30.14 | www.tbri.com | ©2014 Technology Business Research Inc. 12

Hyperscale Servers Ride Cloud Momentum: Q&A

Questions?

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TBR regularly tracks alternative data center infrastructures through extensive customer research

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• TBR’s Converged Infrastructure Global Landscape Report identifies current and future business opportunities for converged system vendors, based on more than 1,300 surveys of converged system owners.

Supporting Research Studies

• TBR’s Hyperscale Server Customer Landscape Report identifies current and future business opportunities for hyperscale server vendors, based on nearly 300 surveys of enterprise hyperscale server owners.

TBR


James McIlroy Vice President of Sales Email: [email protected] Telephone: 603.929.1166

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Hyperscale Servers Ride Cloud Momentum: Contact Information

Christian Perry Senior Analyst and Content Manager, Data Center Email: [email protected] Twitter: @ITwriter Telephone: 603.758.1828


https://twitter.com/TBRinc

http://www.slideshare.net/TBR_Market_Insight

http://www.youtube.com/user/TBRIChannel

https://www.linkedin.com/company/technology-business-research






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T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .

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