Servers Market Trends: A shift in progress
by Mark K.
The recent announcement of AMD's acquisition of SeaMicro for $334m further signals a shift in the data center and server market. SeaMicro's technology, at its core an ASIC-based facric for connecting hundreds of processor cores together along with memory, storage and IO, was designed to be processor-independent. AMD isn't a regular acquirer but historically has closed deals to gain strategic advantage via technology acquisitions. Its last acquisition was the 2006 $5.4bn of graphic chip maker ATI Technologies, which aimed at going against NVIDIA. By late 2011 SeaMicro reported 50 customers some of which leverage its latest dual-core, four-threaded N570 Atom to pack 512 cores in a 256-socket, 10U chassis, effectively doubling its density and increasing the addressable memory to 4GB.
In Dec. 2011 it introduced its newest offering, the SM10000-XE, using Intel Xeon processors instead of Atom chips which enables the device to consume half the power, 1/3 of the space and 12 times the communication bandwidth to connect the server nodes together. SeaMicro's core IP comes from its custom designed ASIC that embeds I/O virtualization, power optimization and supercomputer-style fabric right into the ASIC. All the identical server building blocks form the nodes in a 1.2TB data fabric and are optimized for Internet workloads. Each server runs its own OS, a build-in load balancer directs traffic to the respective CPUs and all is connected to to fully redundant, hot serviceable Ethernet cards and up to 64 SATA or SSD drives. Each unit uses less than 2.5kW power. Overall SeaMicro claims a reduction in power and space - up to 75% reduction that is.
Other vendors, such as HP, have also made recent announcement to support the cloud market with the introduction of its server platform utilizing Calxeda ARM-based processors. HP has stated that the program is not exclusive to ARM and that the adoption of the AMD-SeaMicro platform is being put into consideration. SeaMicro has also a partnership with Dell so expect the AMD-SeaMicro offering to be incorporated into the Dell Cloud Computing Solution offering. The acquisition rational further highlights that architectures other than x86 are likely to become a requirement. It also underlines the importance of the vendors to address the fastest growing server market sector: (low energy and density optimized) Cloud and hyperscale datacenter deployments which is expected to grow 4x over the next few years. Industry experts expects cloud CAGR of 15% through 2015.
The second shift that is occurring ( www.bloomberg.com/news/2011-09-12/dell-l...rvers-gain-tech.html
) is that Internet companies are shying away from top-tier OEMs for their server purchases and instead purchasing "white-box" servers. The x86 server market is becoming split. While virtualization software puts pressures on unit growth, it does encourage the trends for more richly configured, higher prices server systems. The server data from 4Q2011 suggests, first time since 2009, overall unit sale weakness while the "white-label" dynamics is continuing to change the profit and pricing dynamics of the server market to further drive the x86 market towards further commoditization, while pushing the lower priced units from unbranded vendors. White-label server OEMs managed to gain marketshare in 4Q2011 in light of some of the industry challenges.
With virtualization continued adoption and the while-label effect at play along with data center architectures further shifting towards more cloud-centric architectures, it may transform the x86 server market into a more commodity-like industry.