Dig into HP's recent quarterly financial results and you'll see some growth numbers that highlight how HP is capitalizing well on a hot trend: server consolidation. HP, the number one global server supplier by units (and number two by revenue) may have an advantage over its competitors as server consolidation ramps up.
The reason is that HP has balance and strength across all the major platforms of Linux, Unix, and Windows servers, which bodes well for consolidation from any platform to any platform. For IBM, Dell, and Sun, their strengths are more spotty, more polarized.
Enterprises have talked about consolidating their platforms, servers, applications, and data for decades, only to see ever-greater proliferation and scale-out of even more boxes, and in even more places. The ongoing operational costs of supporting the iron sprawl is the truly meaningful "C" in TCO.
Now a confluence of factors is driving consolidation for real, and it has huge implications for the IT industry. Why is now the time to consolidate strategically, and not just for certain projects? The x86 architecture (both 32- and 64-bit, both Intel and AMD), has risen to the task, just about any mainstream task, at price any cheapskate purchasing agent can love. As multi-core chip sets propagate across the server product lines, there will be even more reason to peel off multiple applications from multiple servers at multiple sites into fewer server instances at more centralized facilities. This is pure arithmetic.
Another calculus for this change is the partitioning and virtualization ramp-up across efficiency-minded data centers. This is more like multiplication, and gets utilization rates near where you'd expect a middling grade at just about any other endeavor (70%). You get more work from fewer better boxes. What's more, a mixed bag of Unix, Windows, and Linux platforms can be combined in new ways across like boxes and within partitions on the same box. Virtualization is an important benefit and is making a lot of CIOs happy.
And virtualization efficiencies are only in the opening stages of improvement. There's significant new ease in running apps and platforms as distinct and protected instances within one environment, such as with Sun's Solaris 10 containers. And virtualization as a definition is expanding, especially virtualization of hardware, which bodes very well for consistently high utilization rates regardless of the types of applications supported.
Indeed, HP calls virtualization a "cornerstone" of its server consolidation drive, and a girder for of HP-UX 11i. Expect more news from HP next week on a series of virtualization initiatives. HP is also using consolidation as the business value wedge for its Integrity line of Itanium 2 servers. HP's consolidation efforts are still predominantly in swapping out older Unix hardware for x86 running Windows and Linux. But reducing the numbers of Windows boxes onto more powerful servers (say, running SAP) is also a big deal now, a place where HP is quite strong. Consolidating instances of Linux is only beginning to occur but will also offer a growth opportunity for HP.
When you factor all of this with the increasing use of open source in the data tier, ie My SQL (no threat to HP), the use of higher 10GBASE Gigabit Ethernet buses for surging I/O performance that is attractive for Microsoft Exchange email consolidation efforts (where HP is strong), and the forthcoming impactful roles of mainframe modernization and SOA (also big HP initiatives), then HP is looking pretty good server-wise.
While there's lots of room to jawbone on the comparative attributes of Power5, Itanium 2, Opteron, Sun's Niagara and Rock, as well as Intel's Montecito, to me the more important issue of 64-bit, multi-core chip-powered servers is where they make the most business sense. Lowering operational costs and reducing the server staffing overhead is a business imperative. Having systems-wide management is music to the CIO's ears. Gaining higher overall utilization rates and the flexibility to support all the mainstream platforms and applications more centrally leveraging virtualization is the clincher.
Server consolidation projects, especially the strategic variety (whereby enterprise and hosting organizations make large and long-term supplier commitments), are on the rise and form the low-lying fruit for the heterogeneous environment support vendors. Buyers should expect some good old-fashioned price wars and wheeling and dealing as they seek their preferred server consolidation suppliers, regardless of the platform or applications.