SAN JOSE, Calif. Hewlett-Packard has climbed to the top of the market for blade systems, one of the few bright spots in what has become a slow growth server market. The question now is whether it can hang on in the face of new dynamics and competitors.
Blades are essentially servers on a card, designed into dense chassis that promise savings in space, power consumption and ultimately cost over traditional rack-mounted systems.
HP commands about half the market for server blades up from just ten percent five years ago. IBM had an early lead with its BladeCenter offering, but now Big Blue is a distant second with a third of the market as HP's C-class systems launched four years ago gained traction.
"We just passed the milestone of two million blades sold," said Gary Thome, vice president of blade system software and strategy at HP.
The blade server market is a good one to be in now. Servers are only expected to grow about 2.6 percent on a compound basis over the next five years while the blade server segment is rising about 38 percent over the period, said Jed Scaramella, senior server research analyst at International Data Corp. (Framingham, Mass.).
Even when IT managers basically closed their wallets in the 2009 recession and the server market went flat, blades still eked out 1.5 percent growth. That added about a billion dollars to top line revenues for server makers last year, said Scaramella.
The blade growth comes hand in hand with the move to virtualization. About 12 percent of all servers used hypervisor software last year to support multiple virtual machines on a physical server. The slice will grow to 20 percent by 2014, IDC projects.
"The number of virtual servers shipped will actually be larger than the number of physical machines this year," said Scaramella.
HP faces a new competitor in this rapidly growing market. Cisco Systems entered the server market last year, selling combinations of server, storage and communications systems that compete head on with HP.
Cisco hopes to ride the trend toward converged networks such as Fibre Channel over Ethernet. It rolled out the industry's first FCoE switches in April 2008 as a prelude to the announcement of its first servers in March 2009, and has shipped about a million FCoE switch ports to date.
HP is supporting FCoE through third party products so far, but sees the trend as a limited one.
"FCoE has been through the hype cycle," said Lin Nease, director of emerging technologies for HP's networking group.
"The Ethernet approach to flow control to support a lossless data mode is not as optimized as [Fibre Channel's] buffer credit schemes," Nease said. "Ethernet based schemes will be clumsy compared to Fibre Channel over IP," and the enhanced Ethernet components for FCoE are more expensive than commodity Ethernet chips, he added.
Another potentially disruptive trend on the horizon is a possible shift from x86 to low power ARM- or Atom-based processors for some server jobs. Thome would not comment directly on HP's opinions of such systems, though HP Labs has been researching the trend.
"We don’t rule anything out, but supporting real workloads in critical," said Thome. "There are a lot of ways to cut energy costs besides [changing] the processor," he said.
"We are hunting down watts in the system design whether it's in the power supplies, voltage regulator modules, you name it--we are hunting watts down and getting energy savings," he said.