A decade ago, 70 percent of the IT budget went to hardware. Today, Merrill Lynch reports that the percentage has shrunk to 30 percent, with server maintenance taking up the lion's share of IS department dollars. It's no surprise, then, to learn that the big trends in the midrange market revolve around virtualization, ease of management and a general blurring of the lines between midrange and low-end servers.
"Midrange has seen some shifting to 'good enough' computing driven by economic realities in the data center to do more with less," says Bob McGaughey, director of product management for UltraSparc IV and IV+ at Sun Microsystems. "This trend has seen an increase in volume purchases at the entry points of the midrange."
In the case of the Sun Fire SPARC products, for example, McGaughey reports a sustained increase in sales of Model V490 servers in the past year. Additionally, Sun's newest SPARC servers (the T1000/T2000 "Niagara" servers) have seen rapid growth as more densely populated processors drive down into the less expensive end of the midrange space.
The midrange now encompasses general-purpose servers that can be used for a wide variety of business needs and application environments. They can act as primary business and decision support servers for small to midsize enterprises, as enterprise database servers for ERP applications, and as applications servers in networked environments.
Gone, then, are the days of easy compartmentalization. Midrange is no longer that large block of gear falling between low-end and the mainframe. Sun's definition of midrange server highlights this shift. McGaughey says that the midrange now encompasses general-purpose servers that can be used for a wide variety of business needs and application environments.
They can act as primary business and decision support servers for small to midsize enterprises, as enterprise database servers for ERP applications (e.g., SAP and SAS), and as applications servers in networked environments. That category could span from the high side of the commodity server market through the low-end part of mainframe. McGaughey qualifies it, however, by adding an entry point of around $50,000 for a midrange server (such as a Sun Fire Model V490) and ranging up to $250,000 or more for more robust servers such as the Sun Fire E6900.
IDC, however, defines the market segment a little differently.
"The midrange server market covers servers priced from $25,000 to $499,999," says Jean Bozman, an analyst with the Framingham, Mass. research firm. "This segment generated $13.2 billion in calendar year 2005, representing 26 percent of the worldwide server market."
According to IDC figures, IBM dominates the midrange market with a 42.5 percent share, followed by HP with 25.7 percent and Sun with 17 percent. Yet even within IBM, it has become harder to distinguish the category. Midrange used to be real simple at Big Blue: It was synonymous with iSeries (now System i). IBM's System i product manager Ian Jarman says System i remains IBM's primary midrange offering, but the term now falls across multiple other IBM lines."
This includes Intel-based System x, BladeCenter, and System p Unix-based products," says Jarman. "Even some System z mainframes fall into the midrange."
A widening of the midrange concept, then, has necessitated a better handle on overall management. In particular, the joys of server virtualization are heralded by just about anyone with whom you speak.
"The technologies of virtualization, provisioning and automation will drive IT transformation as long-installed scalable systems are refreshed with new technology," says Bozman.
Jarman, too, touts the increased use of virtualization techniques in System i to manage multiple operating system images on a single server.
"This has spawned a great deal of server consolidation," he says. "People want to manage more efficiently, drive up utilization rates and drive down the costs. It has been an ongoing trend but has strengthened recently."
For example, IBM added a new option for Windows management that enables BladeCenter machines to integrate with System i servers through an iSCSI connection.Customers can use the virtual storage, networking and tape resources of System i to simplify Windows server management.
"Since System i is designed to free business from IT complexity, it will help businesses install applications faster and manage them easier," says Jarman.
Jerome Cheng, a system engineer specializing in servers at Vernon Hills, Ill. based CDW, is another proponent of the movement toward server virtualization. "We have seen more of our customers move towards virtualization," he says. "HP, for example, offers ProLiant Essentials Integrated Lights-Out Advanced Pack to allow deployment of servers by eliminating the need for monitors, keyboards, mice and extra cabling associated with them."
All of this adds up to better management, and that's good news for end users.
Cheng notes that organizations now tend to demand servers with comprehensive management tools, such as Insight Manager offered on HP servers. It provides simplified system control and monitoring, thereby easing management demands.
"The software automates many functions and programs operating on midrange servers," says Cheng. "For example, it can notify IT staff [members] of possible system failures before they occur via e-mail or other user-specified communications channels."
He also recommends HP's Rapid Deployment software, which works in conjunction with Insight Manager. This permits IT managers to tap into servers remotely and deploys/provisions server software automatically.
Sun's McGaughey notes that server management software is evolving to service broader arrays of multi-technology and multi-vendor products in an easy-to-use way. This, he says, helps facilitate the deployment of smaller, more powerful and more cost-effective servers.
"We are moving rapidly towards greater interoperability and a single interface to manage all servers, whether Windows- or Unix-based," says McGaughey.
Sun's own systems management suite, N1, is a move in this direction.
Downside to Virtualization
There is a downside to virtualization and better management, however. IDC reports that total revenue for midrange enterprise servers in the first quarter of 2006 declined 16.2 percent year over year. This is the second consecutive quarter midrange income has dropped.
This market shift probably has two causes. The first is the beginning of commoditization of the midrange at least in its lower reaches. As seen during the past decade in the low end, better processors and components eventually lead to the hardware itself becoming a commodity. Now users can purchase inexpensive midrange systems that can carry the load formerly taken by expensive higher-end servers.
The other factor, closely related, is server consolidation. McGaughey states that at the top end of the midrange (e.g., Sun's E6900), he sees continuing movement toward consolidation. This is another area where better technology is hurting total earnings.
"Older technologies and server sprawls are being consolidated onto larger midrange servers," he says. "While this may seem contradictory at first, it is driven by the same basic economics: to do more with less."