Are Server Sales Slowing?

Once upon a time you could count on the fact that the sun would rise and that server sales would increase. But early indications are showing that taking server sales growth for granted may be no more and the culprit is virtualization.

As more customers adopt virtualization, they are getting a lot more utilization from their existing server infrastructure, which means that need for additional servers is sharply reduced.

Robert Bunger, director of Enterprise and System Development for APC, a unit of Schneider Electric, says sales reports on servers coming from distributors indicate that server sales are experiencing negative growth.

A number of VARs have also said that it's increasingly difficult to sell servers because customers are getting a lot more use out of their existing servers.

While this is all good for customers, the implications of this trend for solution providers in the channel could be quite striking given the fact that we may only be at the beginning of a period of significant decline in server sales.

Bunger said that the market for servers used in large data centers is quite strong, as companies such as Google and other service providers continue to build data centers, but the market for servers among small to medium-size enterprise customers may be a little soft over the next several years thanks to virtualization.