Monday, September 27, 2010

Weaker Server demand forecasted

Industry analysts, such as Ticonderoga Securities and Mercury Research, are expecting server demand to weaken in the next six months. While Dell and H-P had strong performance in the first half of 2010, most analysts attributed this to pent-up demand as firms delayed purchases during the recession. (source: ComputerWorld) Now that those lifecycle replacements have been completed, it makes sense that the market will soften.

My expectation is that we will see a rather pronounced slowdown in server orders, especially in the lines geared to small- to medium-sized businesses. My clients are replacing existing infrastructure but are not significantly adding capacity because they are quite uncertain about what the 2011 economy will look like. They would like to prepare for growth, but they are conserving cash. They are planning, but not buying.

The article cited above references the impact it will have on chip makers, such as Intel and AMD. But I'm also considering how this will affect infrastructure software vendors, as the most prudent operating system strategy ties those license updates to server purchases. I believe this will have a noticeable impact on sales of Windows Server licenses, VMWare licenses, and even business continuity solutions.

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