cutting through the ‘software-defined’ hype - insights from tbr’s 1q13 data center benchmark

TBR

T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .

TBR’s Computing Business QuarterlySM Research Highlights and Outlook Technology Business Research (TBR) Quarterly Webinar Series

August 7, 2013

TBR

2 TBR Quarterly Webinar Series | 8.7.13 | www.tbri.com | ©2013 Technology Business Research, Inc.

Christian Perry, Senior Analyst

Twitter: @ITwriter

Email: [email protected]

Computing Business Quarterly Research Highlights and 2013 Outlook: Webinar Presenters

Krista Macomber, Analyst

Twitter: @klmacomber Email: [email protected]

Coverage and focus areas: • Data center ecosystems • Servers: x86, proprietary (UNIX/mainframe),

microservers • Storage: SAN, NAS, flash, object • Converged infrastructure/integrated

systems • Private/hybrid cloud • High-performance computing

mailto:[email protected]


TBR


• Data Center Landscape Overview

o Portfolio, GTM, partnership evolution

• Data Center Benchmark

o x86 and proprietary server markets are

in flux

o Business requirements for data

management, analytics and IT efficiency

will drive robust demand for storage

o Networking leaders position their

strategies around growing demand for

software-defined networking solutions

CBQ 1Q13 Research Highlights and Outlook: Agenda

TBR Data Center

Benchmark

Vendors:

Brocade

Bull

Cisco

Dell

EMC

Fujitsu

HDS

HP

Huawei

IBM

Juniper

NEC

NetApp

Oracle

Quantum

Unisys

TBR


Data Center Trends

Data center software is now the tipping point for decision makers contemplating hardware purchases

GRAPHIC SOURCE: TBR

• Proprietary hardware

• Stand-alone systems

• Hardware performance

• Hardware reliability/uptime

• Unified management:

software-managed,

industry-standard hardware

• Converged systems

• Automation

• Virtualization

Established Influencers

Emerging Influencers

Customer requirements for IT simplicity are rendering software-based features heavier on the

purchase influence scale

TBR


Converged systems represent the next growth frontier in the data center space, positioning management software to unlock sales opportunities

GRAPHIC SOURCE: TBR AND VENDORS

Customers are buying converged systems…

Applications

Virtual

Assets

Physical

Assets

…to achieve an end-to-end unified environment

Data Center Trends

TBR


Vendors are adapting their partnership and selling models to compete in a software-led and converging data center hardware market

GRAPHIC SOURCE: TBR AND 3CM MARKETING GROUP

Networking

Customer Value

Data Center Trends

Vendors are evolving their hardware and software portfolios and partnership strategies to capitalize on sales opportunities

TBR


The influence of convergence will pressure revenue and profit gains for data center vendors in 2013

CBQ 1Q13 Research Highlights and 2013 Outlook

Data Center Vendor Trends for 2013

IMAGE SOURCE: PINCHINACONSULTING.COM

IMAGE SOURCE: VG247.COM

Overall, market trends are pressuring vendors

adapting their portfolios and supply chains to

convergence and “as a Service” delivery models.

Trends toward a converged and hardware-agnostic IT

environment will limit data center vendor revenue

growth to a mid-single-digit rate during 2013.

The market is consolidating, as vendors partner with

former competitors and seek line of business

divestitures to most effectively deliver upon

customer requirements for integrated IT systems.

TBR


The continued shift to x86 hardware inhibits year-to-year data center revenue and gross margin gains

CBQ 1Q13 Research Highlights and 2013 Outlook: The Data Center Landscape

• Data center revenue, including servers, storage and networking, declined 16.4% year-to-

year and 5.1% sequentially. All product segments fell sequentially, and networking was the

only segment to increase revenue on a year-to-year basis, at 0.4%.

• Data center gross margin of 43.8% was flat year-to-year but declined 200 basis points

sequentially, driven by proprietary server challenges.

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• Intel is positioning to weather changing server market

dynamics, which will accelerate technology development

and customer adoption of x86-based hyperscale servers.

• This will facilitate loyalty of its key server vendor

partners through generating new revenue opportunities.

x86 server vendors are putting the pieces in place to respond to the growing hyperscale movement

CBQ 1Q13 Research Highlights and 2013 Outlook: x86 Server

x86 Server Vendor Trends for 2013

The disruption of traditional x86 server deployments by

cloud deployments is opening new opportunities in the

hyperscale space for vendors.

Some vendors in the x86 server space are beginning to

diverge between focusing on market share achieved through

a scale-out approach and focusing on profitability through

an end-to-end integrated scale-up approach. IMAGE SOURCE: TACTICALIP.COM, CLKER.COM, TBR

IMAGE SOURCE: INTEL.COM

IMAGE SOURCE: QPC-TOOLBOX.ORG

TBR


HP and IBM struggled to retain share, and Huawei, Cisco and Dell were outliers in achieving x86 server revenue and unit shipment growth in 2Q13

CBQ 1Q13 Research Highlights and 2013 Outlook: x86 Server

Vendors are being forced to reassess how they adapt to the ongoing transition from proprietary servers to the x86 platform

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The proprietary server market will continue to consolidate as

Unisys shifts its mainframe portfolio onto Intel’s Xeon

platform, and IBM and Oracle will go head to head in direct

and indirect sales channels with a message of superior

server performance and cost-effectiveness.

Customers may prefer proprietary architectures to run mission-critical workloads, but vendors must work to convince customers of their value

CBQ 1Q13 Research Highlights and 2013 Outlook: Proprietary Server

Rising x86 architecture capabilities and customer

requirements for IT flexibility and cost-effectiveness are

dampening demand for proprietary servers. This heightens

the value of competitive displacements for growth. IMAGE SOURCE: TBR AND SENSEONCENTS.COM

Proprietary Server Vendor Trends for 2013

IMAGE SOURCE: TECHRADAR.COM

As the value of proprietary servers diminishes in the eyes of

customers, IBM and Oracle will be forced to battle more

fiercely for UNIX server displacements in 2014.

IMAGE SOURCE: KASUNPANORAMA.BLOGSPOT.COM

TBR


Proprietary server revenue fell 10.8 percent year-to-year, but IBM, Oracle and Fujitsu plan to stabilize their revenue growth

CBQ 1Q13 Research Highlights and 2013 Outlook: Proprietary Server

Vendors will utilize workload-centric messaging to spark proprietary server demand by targeting customer requirements for high performance and reliability

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Vendors are accelerating maturity of the flash market by investing

in hardware and software development, and tuck-in acquisitions,

and educating customers on how to best new caching and other

emerging capabilities.

Customers’ desire to do more with less will drive storage vendors to compete around Hadoop, flash and management

CBQ 1Q13 Research Highlights and 2013 Outlook: Storage

Storage Vendor Trends for 2013

Enabling simplified support of heterogeneous environments will

drive portfolio development and go-to-market approach for

storage vendors in 2013 and 2014.

IMAGE SOURCE: WHEELHOUSE ADVISORS.COM

IMAGE SOURCE: SILICONANGLE.COM

Big data growth and limited IT and developer resources, are

driving demand for Hadoop. This market will become crowded

from a vendor perspective in 2013.

IMAGE SOURCE: BLACKBAUDKNOWHOW.COM

TBR


Demand for storage will climb into the foreseeable future, but revenue growth will be hindered by pricing pressures and tight budgets

CBQ 1Q13 Research Highlights and 2013 Outlook: Storage

Software-defined storage, downward pricing pressures and tight large enterprise budgets will dampen storage profitability in 2013

TBR


Collaboration and innovation of key vendors through the

OpenDaylight project will help accelerate virtualized and

software-defined networking solution adoption and the

growth of a developer community for long-term innovation.

Virtualization will enable the networking layer to keep pace with disaggregation of applications, servers and storage from hardware

CBQ 1Q13 Research Highlights and 2013 Outlook: Data Center Networking

Data Center Networking Trends for 2013

Networking vendors have plans in place to enable more

software-defined features in their hardware. This final piece

of the networking puzzle will help to accommodate

converged IT infrastructures.

New software and services opportunities are emerging.

Vendors are investing in software-defined management,

which will generate new revenue opportunities in the

networking space. IMAGE SOURCE: ULTIMATESTATEPLANNER.COM

IMAGE SOURCE: ADVOCATECONSULTING.COM

IMAGE SOURCE: DREAMSTIME.COM

TBR


Dell and Juniper will become larger contenders in the networking market as they leverage networking to drive efficiencies across the data center

CBQ 1Q13 Research Highlights and 2013 Outlook: Data Center Networking

Slower commoditization of switches and routers bodes well for stable networking profit performance compared to servers and storage

TBR


Server tiering is changing the data center landscape

Quarterly Topics

Microservers are emerging to expand the hyperscale market

IMAGE SOURCE: CUTCASTER.COM

IMAGE SOURCE: COYOTECRK.COM

CBQ 1Q13 Research Highlights and Outlook: Next Quarter Syndicated Topics

Data center ecosystems are morphing into workload-defined shapes that ultimately dictate customer purchase and deployment decisions

IMAGE SOURCE: THEREGISTER.CO.UK

Workloads are increasingly driving customer decisions

TBR


For additional information, please contact: John Spooner James McIlroy Director, Computing Practice Vice President of Sales [email protected] [email protected]

Technology Business Research, Inc.

Hampton, N.H.

Twitter: @TBRInc

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CBQ 1Q13 Research Highlights and Outlook: Q & A

Questions?

Christian Perry Senior Analyst — Data Centers, Computing Practice

Twitter: @ITwriter


Krista Macomber Analyst — Data Centers, Computing Practice

Twitter: @klmacomber




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Thank you, and see you next quarter!

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T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .

About TBR Technology Business Research (TBR) 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 formats that are tailored to clients’ needs. Our 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. To learn how our analysts can address your unique business needs, please visit our website or contact us today.

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cutting through the ‘software-defined’ hype - insights from tbr’s 1q13 data center benchmark

Technology

data center vendors

data center space

year data center revenue

data management

data center gross margin

data center ecosystems

x86 server vendors

x86 hardware