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.

Windows 7 RC date - May 5th

Microsoft confirmed that the next Release Candidate of Windows 7 will be available starting May 5th. Microsoft spokesman Brandon LeBlanc also announced that the RC will be made available to subscribers developers and IT professionals later this week: "The RC is on track for April 30 for download by MSDN and TechNet subscribers. Broader, public availability will begin on May 5.".

Clearly, Microsoft is pushing hard to put the Vista mess behind them. And I believe that PC manufacturers are pushing Microsoft on this as well. H-P, Dell, Acer, and Lenovo have all seen demand affected by a number of factors, not the least of which is the current economy. But you certainly can't ignore the negative impact that Vista has had on their sales. If forecasts of a modest rebound later this year turn out to be accurate, then that, along with the release of Win7 will -- in my opinion -- propel the Windows cartel (including Intel & AMD) to pretty decent results in Q42009 and Q12010.

ComputerWorld.com has more info ... Microsoft sets date for Win 7 RC

Intel shifts chip design direction

Moore's Law asserted that processing speed would double every 18 months. It was really more of a promise than a prediction, and for several decades, the technology industry delivered on that promise. That may be changing.

At the upcoming annual International Solid-State Circuits Conference, which starts Sunday in San Francisco, Intel is presenting research findings that could completely change the direction of chip design for the next 20-30 years. Instead of focusing on raw speed ... a focus that has given mankind affordable multi-gigahertz personal computers ... the company is moving towards something they call a "System on a Chip" or SOC. This will result in chips that can completely different tasks, such as core processing and radio transmission. Such a chip could enable over-the-air connectivity at speeds that rival (and maybe even surpass) the highest speed tethered connections. Some are predicting transfer rates as high as 5gb per second, which would make today's 3g and tomorrow's 4g networks feel like the old-time dialup 1400 baud modems.

This is garnering a lot of attention from industry insiders, even if the average consumer could care less about it. I suspect this development will turn out to be a game-changer in favor of Intel, and AMD better catch up quickly. And the wireless carriers had better pay close attention, too.

Read more from other bloggers:
Wall Street Journal: Digits
C-Net: Nanotech - the circuits blog

Some big names won't be around in 2010

A recent survey by CIO Insight identified twelve companies that will either fold or be acquired in 2009. 200 participants were asked to indicate which companies, out of a choice of more than 20, would encounter one of those fates this year. The results are in the graph below.


A few surprises for me.

• Salesforce.com - It's hard for me to imagine that 19% of respondents picked them to go away this year. Their growth has been fairly steady, and at times spectacular. And I don't see Oracle or Microsoft wanting to pick acquire a product that competes with their in-house apps. Their alliance with Google bears watching, though.
• AMD - As far I can tell, there is no other viable competitor to Intel. And the market is too big for just one player.
• CA - This company, formerly known as Computer Associates, isn't going anywhere. Their strategy has been growth through acquisition for nearly two decades, and that kind of culture makes them a very unlikely target.

The other big names on the list are, in my opinion, very much in play for this year. Few will go out of business, but at least one or two will end up in a deal. From this list, I'd expect Citrix, Juniper and Checkpoint to be the most likely acquisition targets. Novell is part of Microsoft's Linux Defense strategy, but it provides no other real benefit to society. Expect that product to be even less relevant a year from now.

CIO Insight survey results: Dire Predictions
Survey Methodology: How the survey was conducted

Is Intel cutting prices?

Last week, Barron's reported that Intel is planning significant price cuts across multiple chip lines in the coming months. The new pricing is expected to affect their quad-core and double-core server chips, including the Xeon line. The impact could be as much as a 40% for some models.

Barron's source is an industry analyst named Michael McConnell, and I haven't seen any confirmation or denial from Intel. So it will be interesting to see how this plays out over the coming months. AMD is increasingly aggressive in the server market, which I believe to be the big growth industry for the next 5-10 years.

Tech Trader Daily from Barron's - Intel reportedly cutting prices
Intel Corporation: INTC (NASDAQ)
Advanced Micro Devices, Inc.: AMD (NYSE)