European Organizations Reassess Blade Strategy and Suppliers in 2011, Look For Savings in a Mature Market

A recent study from International Data Corporation (IDC) investigating the past and future spending behavior of organizations making use of x86-based blade servers in Western Europe confirmed that demand is solid, but some shifts are quickly changing the way this modular type of hardware is purchased and deployed. In particular, customers are now looking to maximize their investments, as blade-related costs are perceived as a major hurdle to expansion. Provider switch and the adoption of new, leaner technologies are emerging as the dominant trends in 2011.
According to IDC data (IDC EMEA Quarterly Server Tracker 1Q11, May 2011), organizations in Western Europe purchased 280,800 x86 blade servers in 2010, equal to approximately $1.8 billion or almost 25% of the x86 spending in the region (9% in 2005). However, in 2010 and for the first time since inception, spending on blade machines grew at a slower pace compared to traditional and scale-optimized rack machines (18% YoY versus 37% YoY). IDC believes that a number of industry trends — from the growing weight of virtualization to the impact of a new Tier 1 player like Cisco, to the rise of new modular rack-type platforms built for higher density in scale-out environments — are reshaping the role of blade servers in European datacenters in 2011.
"Blade customers' buying behavior is in many respects different when compared to their industry peers. They typically show less interest in tower machines, a higher virtualization rate, and a high degree of standardization on blade platforms (44% of the installed base, versus less than 20% market average), versus a market that is still relying on rack machines for the majority of workloads," said Giorgio Nebuloni, senior research analyst with IDC European Systems and Infrastructure Solutions. "Being so advanced technologically, blade users are now increasingly considering blade machines as a mature infrastructure component. This is proven by the fact that particular technology features rank relatively low among supplier selection criteria, and choices are driven by broader considerations around financial stability, price point, and breadth of hardware portfolio."
The survey reflected such a change in approach to blade server purchase, as 18% of the respondents indicated a past or future change in blade supplier between 2010 and 2011, often driven by the opportunity to save money on server hardware or on other hardware (such as networking or storage). Conversely, only 10% of the loyal customers mentioned cost of changing as a primary hurdle to switching hardware provider.
"The survey results hint that blade customers can be broadly divided into two categories; in one case they own large datacenters and they have typically standardized on one or two blade suppliers; in the other, they operate smaller infrastructures, run multivendor environments, and tend to be more cost-conscious," said Nathaniel Martinez, program director, European Enterprise Servers. "In both cases, current users are still generally gung-ho about blade infrastructures, as proven by the fact that across segments the vast majority of customers expect to purchase the same amount of or more blades in 2011 compared to 2010."
At the same time, end users seem not to be fully aware yet of the fact that, being so apt to being virtualized in static or private cloud environments on one side, and suffering some cannibalization from scale-out servers in technical workloads on the other, the blade installed base is bound to shrink.
Due to all of these factors, IDC expects blade servers to gradually become legacy or "franchise" environments for standard enterprise applications, and we foresee the number of deployments to exhibit slower growth over the next years. At the same time increasing strategic value is poured into the blade platform, which for many enterprises will become the standard to deliver virtualized, business-critical, in-house computing resources. "Of the respondents polled, the preponderant majority had deployed their first blades prior to 2009. This means that the blade customer base will show limited growth in the future and suppliers will need to focus on increased penetration in current customers or on competitive 'rip and replace' activity," said Nebuloni. "In this context, the addition of Cisco to a market currently dominated by HP and, to a lesser extent, IBM and Dell, has quickly made the blade enterprise play a zero-sum game. OEMs will increasingly find themselves forced to decide the extent and acceptable costs at which they are willing to defend their existing blade business. Tactical implementations in midsized datacenters, or installations that are lacking a deep consultative involvement with the customer (including supply of services and software), will be particularly at risk."
This survey and resulting special study on The Age of Maturity — Blade Server Purchasing Behavior in Western Europe, 2011 (IDC #GE04T) focused on five European countries (France, Germany, Italy, Spain, United Kingdom) and was conducted interviewing staff responsible for purchasing or managing servers in more than 300 organizations.
The study was carried out between April and May 2011 and included a comprehensive assessment of the respondents' blade server infrastructure, spanning from operating systems and virtualization platform used to workloads deployed, from drivers and obstacles to blade purchase to plans for supplier change. As a complement to the primary research, IDC recently published a summary of market data for this segment in EMEA Blade Server Forecast and Analysis, 2011–2015 (IDC, #GE02T).