Server sales set for surge

Businesses are beginning to once again invest in servers after a slow 2009

The global server market is witnessing a rare boom. This is the result of an apparent stabilisation in the economic climate combined with a surge in businesses’ data-handling needs.

The difficult economic environment in 2009 forced businesses to defer purchases of servers in order to minimise costs. This extended the replacement cycle for the products, which generally have a lifespan of about five years.

However, now server manufacturers are suddenly seeing strong growth as users begin reinvesting in IT to update their ageing infrastructures, as financial concerns begin to ease.

According to the Financial Times, analysts at JPMorgan recently revised their estimates for server revenue growth in 2010, more than doubling their expectations from 6.2 per cent to 14.3 per cent, hailing it “a unique phenomenon in IT hardware”.

IBM, HP, Dell and Oracle, as well as processor manufacturers Intel and AMD have all taken advantage of this trend, each swiftly bringing out a range of server products.

Networking vendor Cisco also announced the second generation of its Unified Computing System (UCS) earlier this week, which it hopes will help it grab some server market share.

Analysts say that now is the optimum time to invest in server upgrades, claiming that the most recent generation of servers can pay for themselves within a few months.

This is owing to their reduced power and cooling costs compared with previous generations of servers.

Another factor contributing to the rise in server revenue is a higher demand for upgrades, driven by an influx of more data-intensive applications and a surge in cloud computing.