Tag Archives: dell

Server shipments decline as customers float towards cloud

Gartner reports that worldwide server shipments have declined by 4.2% in the first quarter of 2017.

Not a surprise considering the growth in cloud adoption but there are several points of interest.

One is that although Hewlett Packard Enterprise (HPE) is still ahead in revenue (over $3 billion revenue and 24% market share), Dell EMC is catching up, still number two with 19% share but posting growth of 4.5% versus 8.7% decline for HPE.

In unit shipments, Dell EMC is now fractionally ahead, with 17.9% market share and growth of 0.5% versus HPE at 16.8% and decline of 16.7%.

Clearly Dell is doing something right where HPE is not, possibly through synergy with its acquisition of storage vendor EMC (announced October 2015, completed September 2016).

The larger picture though is not great for server vendors. Businesses are buying fewer servers since cloud-hosted servers or services are a good alternative. For example, SMBs who in the past might run Exchange are tending to migrate to Office 365 or perhaps G Suite (Google apps). Maybe there is still a local server for Active Directory and file server duties, or maybe just a NAS (Networked Attached Storage).

It follows that the big cloud providers are buying more servers but such is their size that they do not need to buy from Dell or HPE, they can go directly to ODMs (Original Design Manufacturers) and tailor the hardware to their exact needs.

Does that mean you should think twice before buying new servers? Well, it is always a good idea to think twice, but it is worth noting that going cloud is not always the best option. Local servers can be much cheaper than cloud VMs as well as giving you complete control over your environment. Doing the sums is not easy and there are plenty of “it depends”, but it is wrong to assume that cloud is always the right answer.

Real-world cloud computing adoption: pretty slow according to IDG Connect survey

A survey by IDG Connect, sponsored by Dell, asked European IT “decision makers” in organisations with 500 or more employees about their migration plans. The survey took place at the end of 2012 and in early 2013.

Here are the cloud migration plans for email:

  • Migrate email to Office 365: 13%
  • Migrate email to Google Apps: 8%

Unfortunately the survey does not cover other cloud providers for email.

What about usage of cloud servers?

  • Plan to use Amazon virtual servers: 2%
  • Plan to use Microsoft Azure virtual servers: 1%
  • Plan to use other cloud providers for virtual servers: 9%
  • No plans to use cloud servers: 88%

Surveys are (very) imperfect, and plans can change. Nevertheless, these figures suggest that migration to the cloud remains in an early phase.

A couple of further observations. One is that while the benefits of cloud computing are real – including multi-tenancy, scalability, lower maintenance cost, and arguably better security and resiliency – there are also downsides, in particular loss of control, and vulnerability to interference by outside agencies.

Costs might or might not be lower. There is sometimes an assumption that lower maintenance costs and greater elasticity must mean lower cost overall, but it does not always stack up that way.

On the other hand, I also wonder whether IT administrators protecting their internal organisations is a factor. If you ask an IT admin to assess the benefit of outsourcing a chunk of his work, will you get an objective result? Maybe not.

You can see the whole survey (which also has some eye-opening statistics about usage of Windows XP) here (registration required).