Bladewatch.com

http://www.itjungle.com/tfh/tfh012108-story02.html

For the past several years, I have ended each work year by attending a server technology conference hosted by UBS, which typically draws the top brass from the major server divisions of the tier one server makers. This year, because of the high cost of putting on the event, UBS decided to not do it. But some of the server makers did attend the Global Technology Conference in San Francisco hosted by Lehman Brothers in December. One of them was IBM, and Bill Zeitler, the senior vice president in charge of Systems and Technology Group, had some interesting things to say.

I  am not big on public speaking, but at the UBS event I did sit on a panel to talk about server-related issues with the vendors and with the IT staff at the Swiss bank. It gave me a chance to remind everyone listening that in the future, there would be a virtualization blowback on server shipments and revenues, much as hit IBM’s mainframe 15 years ago and which started to hit the AS/400 line a decade ago; the Unix market suffered a similar contraction starting in the late 1990s. And at some point, when the X64 market is saturated with 64-bit and virtualization-capable boxes, the X64 server market gets its crunch time. Particularly once virtualized I/O is part of the virtualization technology. At that point, no customer is going to be buying the 200 percent or 300 percent typically needed server capacity to deal with week-end, month-end, and year-end processing peaks. And at that point–mark my words–server sales are going to contract, bigtime. And with the entire server business predicated on the inefficient use of servers to generate profits, this is going to put tremendous pressure on server makers to try to justify their platforms with integrated software and services. That will, in turn, put margin pressure on the companies as a whole, which means vendors will jack up support prices on legacy iron and make it very painful for companies to stay with existing iron and software.

Check out this interesting article about IBM expansion including the system I platform, we’ll need to see what 2008 brings both in terms of business revenues, IT investment and server innovation. The more cross platform choices we have though, the more we can look at consolidation or virtualization of the infrastructure, being more efficient with what we have, which has to be a good thing for the consumer and the vendors.

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