Vendors Expanding Hyperscale Server Portfolios Beyond Cloud to Unlock a Nearly $2 Billion U.S. Market

SOURCE: TBR

Technology Business Research’s new Hyperscale Server Customer Landscape Report estimates that the market for hyperscale servers at U.S. organizations with at least 500 employees represents a $1.7 billion opportunity over the next 12 months. As cloud computing continues to shape the market for IT infrastructure, data center customers increasingly require simplicity, flexibility and high levels of scalability in their on-premises hardware ecosystems.

“Cloud services are driving a massive market for hyperscale server technology, but we’re now starting to see the trickle-down effect into the enterprise space,” said Christian Perry, senior analyst and content manager in TBR’s data center practice. “We see data centers moving toward server infrastructure that’s easy to purchase, easy to deploy and relatively simple to manage. These are customers that are not afraid to consider change to obtain the business outcomes they seek.”

TBR conducted nearly 300 surveys of IT decision makers and line-of-business executives at U.S. organizations that have purchased and deployed hyperscale servers from a range of providers, including Dell, Dell DCS, HP, IBM, Quanta and others. Although the primary market for hyperscale servers remains rooted within cloud service providers, opportunities are developing for organizations that do not necessarily provide public cloud services, in part due to the off-the-shelf portfolio expansion of top server OEMs.

Products such as HP’s Moonshot and ProLiant SL, Dell’s PowerEdge-C and IBM’s NeXtScale present enterprise customers with easily deployable, highly scalable servers that meet requirements not only for cloud-centric workloads such as cloud hosting, but also for traditional, enterprise workloads. Despite the perception of hyperscale server technology as being cloud driven, server OEMs are unlocking opportunities for hyperscale outside of cloud.

Along with extensive research into the workloads and expected benefits that influenced the purchase of hyperscale servers, TBR examined the influence of 18 server attributes — including quality, reliability, support, capex/opex savings and TCO (total cost of ownership) — on server purchases. TBR also investigated customer purchase behaviors around services, which TBR sees as a critical differentiator for server OEMs as they look to expand their hyperscale presence in both the cloud and enterprise markets.

“Outside of the top-tier cloud-scale data centers run by Google, Amazon, Microsoft, Facebook and a handful of others, there is a growing market for hyperscale server technology,” Perry said. “Beneath that tier, we’re finding that customers rely on integration and similar services to ease their transition into a new class of server technology. This is where the OEMs will have a crucial advantage over ODMs [original design manufacturers].”

Although Dell (with its DCS business unit) and HP (through its newly inked joint venture with Foxconn) compete directly with ODMs in the custom-heavy cloud service provider market, these vendors — along with IBM — continue to engineer and sell off-the-shelf hyperscale server platforms that enterprises can quickly deploy. Because enterprise customers appear willing to consider and deploy hyperscale for a widening group of workloads, TBR expects hyperscale servers to progressively supplant traditional x86 servers in large organizations.

The value proposition of hyperscale servers is tied closely to flexibility and cost savings, but TBR’s research found that work remains for vendors to show how cloud-scale benefits can improve traditional data centers. For example, while top-tier cloud service providers can more easily realize cost savings through simplified architecture within a massive deployment, TCO benefits are more challenging to market among smaller server deployments. Further, other benefits tied to the intended hyperscale value proposition, such as space savings, do not necessarily translate in enterprise deployments.

TBR’s Hyperscale Server Customer Landscape Report includes detailed analysis into customer purchasing behavior, budget expectations, workload deployment and plans, system attribute expectations and satisfaction, services purchased, business and environment expectations and satisfaction, and vendor profiles that include information about the types of typical buyers of hyperscale servers from Dell, DCS, HP and IBM.

The report is now available for purchase. For more information about TBR’s Hyperscale Server Customer Landscape Report, please contact Alison Crawford, senior marketing manager, at 603-758-1838 or alison.crawford@tbri.com or James McIlroy, vice president of sales, at 603-758-1813 or mcilroy@tbri.com.

ABOUT TBR

Technology Business Research Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, networking equipment, wireless, portal and professional services vendors. Serving a global clientele, TBR provides timely and accurate market research and business intelligence in a format that is uniquely tailored to clients’ needs. TBR analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.