Cloud computing, mobile demands drive up IT spending

IT organizations have some cause for extra holiday cheer: Tech spending has steadily risen over the past year and will continue to grow come 2011.

Several factors are contributing to companies loosening their purse strings to invest heavily in IT product. Beyond the improving economic climate, organizations are looking to increase their adoption of maturing, game-changing technologies, including cloud computing, mobile computing, and social networking.

Demand for x86s puts HP on top of the server heap

According to IDC, the server market has especially boomed of late. Worldwide factory server revenue increased 13.2 percent year over year to $11.8 billion in the third quarter of 2010, with server shipments expanding by 13.1 percent year over year. The increased demand for server hardware hit an array of geographic regions and sectors, too, including SMBs, enterprise companies, the public sector, and cloud/hosted organizations.

Demand for volume servers was especially high, with revenue growth of 22.8 percent of last year’s; meanwhile, midrange servers enjoyed growth of 19.8 percent. Sales of high-end enterprise systems, however, dropped by 10.4 percent, according to IDC.

“The server market experienced its strongest growth in 10 years in the third quarter of 2010,” said Matt Eastwood, group vice president of Enterprise Platforms at IDC. “While much of the third-quarter refresh occurred in x86 and CISC-based mainframes, IDC expects the recovery to extend to Unix platforms in the fourth quarter of 2010.”

That increased demand for x86 systems helped push HP to the No. 1 spot among worldwide server vendors. As of Q3, the company owns 33.4 percent of the share, according to IDC. Strong demand for x86 ProLiant servers helped to fuel sales in the past quarter as HP saw revenue increase by 22.2 year over year.

Close behind HP is IBM, which holds 30.6 percent of the server market. “Although IBM continued to experience weakness in its Power Systems business, System z demand improved nicely following the recent zEnterprise product refresh cycle coupled with a continued strength in demand for the x86-based System x servers during the quarter,” IDC reports.

Rounding out the top five is Dell, which holds 14.1 percent of the factory revenue market share and enjoyed 18.7 percent revenue growth thanks to demand from enterprise and small and medium-sized businesses; Oracle at 6.7 percent market share; and Fujitsu, with 5.1 percent of the market share for Q3.

Unix falters against Microsoft, Linux, and z/OS The accelerating demand for x86 servers was good news for Microsoft. Shipments of hardware running Microsoft server platforms increased by nearly 15 percent year over year, with Windows servers representing 47.7 percent of overall quarterly factory revenue, according to IDC.

Linux server revenue, meanwhile, grew 32.6 percent over the past year; Linux machines now represent 17.5 percent of worldwide server revenue. 

IBM’s System z servers running z/OS also showed positive growth, according to IDC: “Overall, z/OS server revenue improved 14.8 percent year over year to $1.0 billion, representing 8.6 percent of all server revenue in Q310.”

Unix hasn’t fared quite so well over the past year. Spending on Unix systems has dropped by 5.5 percent, according to IDC, as companies continued to defer system upgrades. However, that trend may be reversing. “The third quarter data shows that unit shipments in the midrange Unix server segment [$25,000 to $250,000] actually increased year over year, as did revenue for those servers,” said Jean Bozman, research vice president for  enterprise servers at IDC. “[T]his growth in midrange Unix servers is likely the result of workload consolidation from aging Unix servers — and of IT build-outs for telco, banking, and government infrastructure in fast-growing economies worldwide.”

Blades enjoy cut of x86 market The blade market saw modest growth over the past year, with shipments increasing by 5.5 percent and factory revenue increasing 23.1 percent. Overall, blades servers — including x86, EPIC (Itanium-based), and RISC blades — accounted for $1.7 billion in revenues, representing 14.1 percent of quarterly server market revenue. More than 88 percent of all blade revenue is driven by x86 systems, according to IDC, and 18.9 of all x86 server revenue comes from blades.

“Blade systems represent a strategic element of server portfolios, as vendor utilize the platform as the foundation for converged solutions,” said Jed Scaramella, research manager for enterprise servers at IDC. “Additionally vendors continue to expand their blade offerings to support more workloads, including extreme virtualized environments, scale-out deployments, and higher-end workloads.”

Data demands drive storage growth Storage vendors, too, have reaped the benefits of swelling troves of organizational data. The worldwide storage software market has seen an 8.7 percent revenue increase over the past year, and a 6.3 percent increase since last quarter, according to IDC.

“Customers continue to rearchitect their backup and recovery approaches in light of consolidation, ongoing data growth, and infrastructure changes with all three factors driving continued spending in data protection,” said Laura DuBois, program vice president for storage software at IDC. “Archiving deployments are fueled by a combination of regulatory, legal, and IT efficiency motivations. Lastly, we are seeing increased spending on the infrastructure side as a result of interest in automated storage tiering.”

EMC holds the largest chunk of the market, boasting 24.4 percent of the total revenue. The closest competitor is Symantec at 16.5 percent, followed by IBM at 13.4 percent, NetApp at 8.4 percent,.CA at 3.3 percent, and HP at 3.2 percent. NetApp, however, saw this most significant growth over the past year, a jump of 19.8 percent; EMC gained 13.9 percent. HP was the only company in the bunch to see a loss in this category, with revenue dropping 9.4 percent year over year.

Mobile and malware give content security a boost In the security arena, vendors saw demand for content-security gates wares rise in 2010 — at least partially fueled by massive mobile deployments, according to Infonetics.. “The proliferation of smartphones, iPads, netbooks, and other mobile devices is driving purchases of gateway security solutions as companies seek to protect from malware the critical infrastructure in their headquarters, branch offices, remote offices, and data centers,” the company reports

Security threats such as Stuxnet and Zeus also helped drive purchases of content-security products. All told, the worldwide content security gateway market grew 10 percent from 2Q10 to Q310, hitting $715.2 million, according to Infonetics. Overall content security gateway revenue increased by 25 percent year over year, with the appliance segment performing especially well with revenue up 35 percent.

Among the vendors in the space, McAfee boasted the most content-security gateway revenue for the quarter, followed by Blue Coat, then Cisco.

Sales of network security appliances and software weren’t quite so hot, down 0.1 percent. Cisco lost some ground to Juniper and Check Point in this space. Juniper, in fact, now holds a substantial lead in the category of integrated security appliances costing $30,000 or more. The company also posted its biggest quarter to date in SSL VPNs.

Transformative technologies to seed 2011 spending Looking ahead to 2011, IDC predicts that IT spending will increase by 5.7 percent over 2010 to hit a total of $1.6 trillion as game-changing technologies such as mobile computing, cloud computing, and social platforms take hold. “In 2011, we expect to see these transformative technologies make the critical transition from early adopter status to early mainstream adoption,” said Frank Gens, senior vice president and chief analyst at IDC. “As a result, we’ll see the IT industry revolving more and more around the build-out and adoption of this next dominant platform, characterized by mobility, cloud-based application and service delivery, and value-generating overlays of social business and pervasive analytics.”

Among the biggest winners will be vendors of public IT cloud services: Said services will grow by more than five times the rate of the IT industry next year, up 30 percent from 2010, as organizations move a wide range of their business applications into the cloud.

The mobile-computing market will continue to boom as well in 2011. Shipments of app-capable mobile devices such as smartphones and tablets will surpass PC shipments within the next 18 months, IDC predicts. Further, mobile app downloads will surge from 10 billion in 2010 to 25 billion in 2011.

Finally, social business software — which has enjoyed increasing adoption in the enterprise over the past 18 months — will see a compound annual growth rate of 38 percent through 2014, IDC predicts.

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