Save our servers: The next extinction begins

Traditional equipment makers are stuck, as tablets and smartphones kill PC sales and the cloud eats into server sales

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While most pundits obsess over the war between iOS and Android in the mobile market, it's also important to consider who's making those tablets, regardless of the operating system. It's not the PC makers. The lion's share of sales belongs to Apple, Samsung, and

I suspect that the Pew study may exaggerate the number of people who own a tablet. I live in San Francisco, one of the most connected cities in the country, and I don't see quite that many tablets in the hands of my fellow urbanites. But by any measure, tablet sales are exploding, and it's no longer possible to believe the tablet is merely a companion to a PC.

A transition, not a cataclysm
As worrisome as these numbers are for hardware makers, it would be wrong to predict an outright collapse in server sales, says Gartner analyst Ed Anderson. "Enterprise organizations will continue to need computing power. The only change here is that instead of purchasing their own systems, they will purchase computing capacity through cloud vendors," he tells me.

However, cloud vendors will be much more efficient in their use of their server farms, because of the cloud attributes of multitenancy, server virtualization, provisioning, and orchestration capabilities, he adds. "The more efficient use of servers by cloud providers will mean that overall, utilization rates for servers will go up, which means that we won't need as many of them to perform essentially the same work."

There's also a somewhat contradictory trend that my colleague David Linthicum pointed out this week: There's simply not enough innovation by cloud providers, and that's slowing adoption, he argues. He may well have a point, but how much that will slow cloud adoption is debatable. Anderson says growth in cloud infrastructure services (IaaS) "is impressive, ranging from 44 percent to 48 percent annual growth over the next couple years."

That money is coming from some place, and companies that lay out so much cash for IaaS are not likely buying many servers of their own. To her credit, Meg Whitman, the CEO of struggling Hewlett-Packard, isn't just whistling in the wind -- she's pushing hard to gain traction in cloud services and other areas, such as tablets, where HP is weak. But it's getting very late for traditional hardware makers, and Whitman yesterday warned Wall Street that the company's outlook is still rocky.

And as I saw at OpenWorld, Oracle's cloud efforts are already in high gear. The database giant is creating a cloud service that lets companies rent processing power, storage, database software, and business applications and even run them from within their own firewall.

Traditional hardware makers are going to have run very fast to keep up.

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This article, "Save our servers: The next extinction begins," was originally published by Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at For the latest business technology news, follow on Twitter.

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