But Wait, There's More

Server Market to Grow to $81 Billion by 2011? Is That a Joke?

My original working title for this brief story was "Server Market to Grow to $81 Billion by 2011? Really? No, Really? Is That a Some Sort of Joke? HAHAHAHAHAHA," but that wouldn't fit very nicely on the page layout of this newsletter. But that was indeed my reaction when I read a report from IT market researcher Research and Markets about the current and future size of the worldwide server market.

This is not just an estimate that is a little off, but one that is off by a lot. Either someone made a typo, or there is an analyst at the company who is unfamiliar with both The Spreadsheet Effect (cash flow always goes positive six months out . . .) and the current state of server technology and its likely impact on server sales. But nonetheless, I would like to say thank you. It has been a long week, I just got back from the dentist (the Novocain had just worn off), and I really needed a good laugh to lift my spirits. Again, thank you.

All joking aside, the Research and Markets server report referenced above provided what seems like reasonable numbers for the size of the worldwide server market in recent years, pegging the market at $49.8 billion in 2004, up from $44.6 billion in 2003. It was the jump to $81 billion in sales by 2011 that cannot be true, and I will explain why. The relentless competition among server processor architectures and among all of the individual suppliers of all the gadgets that go into servers continues to heat up according to both the precepts of Moore's Law and the competitive laws of supply and demand. Server prices are going to continue to drop. Moreover, the advent of more sophisticated operating systems, with either integrated or bolted-on virtualization technologies, is going to eventually make servers much more efficient than they currently are. While the late 1990s saw an explosion of server footprints as distributed computing entered its heyday, the late 2000s are going to witness what could be a similarly huge implosion of footprint counts as customers learn to virtualize and consolidate their servers. So the price per footprint is coming down along the Moore's Law curve--maybe 30 percent to 40 percent every 18 months now--and the number of footprints will eventually start coming down--perhaps by a factor of three or four among enterprises. If we start expanding the definition of the server market to include SOHO servers, perhaps the footprint count for servers could be maintained or even extended--there are a lot more homes than businesses in the world, after all--but that would be an apples-to-oranges comparison. I think what can be safely said is that within six years, there will be fewer server footprints unless something really weird happens, like we all have to start our own businesses. And a lot fewer footprints times a radically lower selling price means less revenue for the server market, not more. No joke. And don't even get me started on how grid/utility computing might even accelerate the decline in server box sales and the revenue streams. . . .

IBM's Top Marketing Executive Quits

Abby Kohnstamm, who has been senior vice president of marketing at IBM since 1993 and came to Big Blue from American Express when former chairman and CEO, Lou Gerstner, came to IBM to turn it around, announced last week that she is leaving the company. Her first job was to consolidate IBM's vast advertising budget, which was spread out to agencies all over the world, and to develop the whole "e-business" marketing strategy for which IBM is now famous. IBM said in a statement that she plans to devote more time to non-profit organizations, and that Bruce Harreld, IBM's senior vice president of strategy, would take over the top marketing job.

Big Blue Gets Presidential Award for Processor Innovation

Last week, IBM was presented with the National Medal of Technology by President Bush for its efforts to advance the art of processor development and production here in the good old U. S. of A. The White House cited IBM's advances in DRAM technology, multicore processors, copper and silicon-on-insulator, and strained silicon chip making processes (used in the PowerPC and Power families of chips), and high-speed silicon-germanium chips (used in cell phones and other communications devices) as the reasons for giving IBM the award. The company's East Fishkill and Albany, New York; Austin, Texas; Burlington, Vt.; Rochester, Minn.; and San Jose, Calif., labs were specifically cited in the award. The National Medal of Technology is the highest honor that the White House gives to technology innovators. It was established in 1980 by Congress to help promote and highlight indigenous technology development.

Evault Solicits Contestants for the Data Turkey Awards

If you have a spectacular data recovery or most disastrous data loss story you want to tell to either brag about your prowess in the data center or to show people the error of your ways so they will not make the same mistakes as you, then EVault wants to hear all about your stories. EVault has announced a new competition called the Data Turkey Awards for people who fess up on their mistakes and brag about their smarts when it comes to backup and archiving. EVault is, of course, looking to raise awareness of data protection issues, since it is a vendor of online data backup solutions, and the awards are also aimed at helping it find new customers.

If you have a story to tell, you can enter the Data Turkey Awards before December 2 and compete for the $500 American Express check (one each in both the data recovery and data loss categories) and a free one-year subscription to the EVault Protect service for up to 10 GB of data. Winners will also get to donate $500 of EVault's money to a local charity or food bank, and honorable mentions will get a one-month trial of EVault Protect service.

Seagull Financials Improve Dramatically in Second Quarter

Application modernization software maker Seagull Software is seeing better times, if its recently reported second quarter of fiscal 2006 financial results are any indication. Seagull said that for the quarter ended October 31, sales were $7 million, up 23 percent, and that net income, at $49,000, was a far cry better than the $1.4 million loss this time last year. Seagull said that software license sales in the quarter were $3.2 million, up 30 percent, and maintenance and services sales were $3.9 million, up 18 percent. This is Seagull's fourth consecutive quarter of black ink on the bottom line. Don Addington, Seagull's president and CEO, said that it is still very difficult to predict when deals will close in this IT climate, and therefore the company is not providing any future guidance on sales. This is becoming more and more common in the IT market, in fact. No top executive can make promises they cannot keep--and still keep their jobs. It is best not to make promises at all.

DataMirror Partners with Constant Data, Supports SQL Server 2005

High availability and data transformation software maker DataMirror said last week that it has partnered with Constant Data to deliver data replication for Windows, Unix, and Linux platforms to complement its own replication for OS/400 servers. Constant Data, which is based in Minneapolis, Minn., is noteworthy in that its real-time data replication software was the first such software created for Linux and was deployed in space shuttle Discovery. Under the agreement, DataMirror will resell Constant Replicator, its new partner's replication product, and integrate it with its own iCluster software for the iSeries, thus allowing OS/400 shops to manage data replication for i5/OS and OS/400 as well as Windows, Unix, and Linux on the iSeries product line from within iCluster. Constant Replicator also supports Solaris and Mac OS X. DataMirror's own Transformation Server product provides database replication across multiple relational databases running on various platforms, while Constant Replicator provides file system mirroring and can be used to synchronize databases as well. Still, DataMirror is not replacing Transformation Server with Constant Replicator--they do different things, and DataMirror is giving customers options.

The company is also partnering for competitive reasons. Back in August 2004, iSeries high availability software maker iTera announced a similar partnership with Constant Data to provide multi-platform replication support.

In a separate announcement, DataMirror said that Transformation Server fully supports Microsoft's new "Yukon" SQL Server 2005 database, which as readers of The Windows Observer learned in great detail, was launched a few weeks ago.