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. When I wrote this story, it had 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. . . .

HP's Adaptive Enterprise Czar Steps Down, New EVP of Consulting Hired

Nora Denzel, who has headed up Hewlett-Packard's software business and its Adaptive Enterprise initiative to construct systems and software that allows more malleable IT infrastructures to be created and sold to businesses, will step down this week from her post. Denzel, who was a senior vice president and general manager at HP--as high as you can go before you are named president, CEO, or chairman--did not give a reason for her leaving, aside from the standard "personal reasons" non-answer that executives often use as they are either heading for the door or being shuffled toward it. There was much talk last week about Denzel being part of former chairman and CEO Carly Fiorina's inner circle, and that this might in some way be the cause for her leaving now that Mark Hurd is the president and CEO and Patricia Dunn, chairman and CEO of Barclays Global Investors, has no intentions of giving up the chair position on HP's board of directors.

Denzel will not be easily replaced at HP, and the timing seems a bit odd now that HP's software business unit has broken through the $1 billion mark and turned profitable in fiscal 2005. For all we know, Denzel and Hurd did not agree on what HP should do next to grow its software business. Why HP, with loads of cash that it has repatriated, is not going on an acquisition binge to double or triple that business is a bit of a mystery. While $1 billion is a lot of software sales for HP, it is not that much compared to the major software players. But, with HP trying to be platform neutral and so many software partners needed to peddle (either directly or indirectly) HP's ProLiant and Integrity iron, HP doesn't have a lot of acquisitions it can do in software without upsetting at least some of its software partners.

Denzel came to HP in 2000 from Legato Systems, a company that storage giant EMC acquired for $1.3 billion, and an HP that wasn't thinking about buying Compaq might have snapped up ahead of EMC (but didn't). She started out as a storage software engineer at IBM in 1984, and joined Legato in 1997. She came to HP to run its network storage software business, and was pretty rapidly moved up to the top spot in HP's software biz by Fiorina. Denzel was the key driver behind some relatively small software acquisitions, including Novadigm, Consera, and Talking Blocks in the past two years and Peregrine Systems recently and Trustgenix only a few weeks ago. HP sure didn't say what was going on with her departure. "HP admires Nora for her many contributions to HP, and for bringing the business to profitability in the fourth quarter," its press relations department said in a statement. "We wish her the best of luck in her next endeavors." Todd DeLaughter, who is general manager of the OpenView systems management software business inside the HP Software group, has been named the interim general manager for the entire software business.

In a separate and unrelated announcement, HP said last week that it has hired John McCain (no, not the U.S. Senator) to be the senior vice president of its Consulting and Integration unit. McCain was formerly the CEO of Capgemini's North American business unit and who spent 16 years at EDS prior to that. McCain will report to Steve Smith, senior vice president and general manager of HP Services.

Sun Finally Delivers ZFS and Linux Containers

Sun Microsystems has finally announced the availability of the "Project Janis" Solaris Containers for Linux Applications, which allows applications written for Red Hat Linux to run on X86 and X64 iron to run inside a Linux ABI environment that is encased in a Solaris container. Project Janus was one of the key features that Sun has been talking about for nearly two years as it was working on Solaris 10 and then delivered it at the end of January 2005. Sun says that the ABI environment will pose 10 percent or less overhead compared to running real Linux and the application on the same exact iron, which is a fairly respectably low performance penalty. It will be interesting to see if Sun does one better and offers a Windows version of this ABI-container combo, which is theoretically possible. The SCLA code will be poured into the OpenSolaris project by the end of the year so it can start making its way toward the next commercial version of Solaris.

Sun also announced that it has given the 128-bit Zeta File System (ZFS), another key and missing piece of Solaris 10, to the OpenSolaris and they are dealing with integrating it with the next rev of the open source version of Solaris. ZFS is a massively scalable file system with beefed up error detection and correction. Sun says that it expects to have ZFS commercially available for Solaris during the first half of 2006.

Evans Data Survey Says Companies Are Developing New Code--Finally!

According to surveys of application developers in North America performed by Evans Data, companies are beginning to work on new applications--finally--and are starting to do so with 64-bit technologies. Evans Data surveyed 400 developers in North America for its October 2005 survey, and found that client/server application development (by which they mean two-tiered application) surged by 30 percent in the past six months; client/server technologies had been in decline among developers in the past three years, because they were apparently working on other problems. The survey also finds a 19 percent increase in developers who are spending the bulk of their time writing new code. And, significantly, development for 64-bit architectures has exploded by 61 percent since the fall 2004 survey, driven in large part by the adoption of 64-bit memory extensions for X86 chips, but also by the prevalence of 64-bit architectures for other machinery.

The latest survey pegs Java as the most commonly used programming language, with 48 percent of developers in North America using it for development. Evans Data didn't specify what the other programming languages were popular (you have to pay to see that data), but clearly Visual Basic and .NET come in as number two, probably followed by C and C++ and then other languages like RPG and COBOL. Interestingly, Evans Data found that 70 percent of developers are working mobile applications of one sort or another.

XenSource Previews Xen 3.0 Hypervisor, XenOptimizer Tool

XenSource, the company behind the development of the open source Xen hypervisor, has given out a sneak preview of the forthcoming and free Xen 3.0 hypervisor and the company's first commercial software product, which is called XenOptimizer. Not only has XenSource been adamant about the fact that virtual machine partitioning hypervisors will become commodities, but the company has been working hard to actually make this happen. As Simon Crosby, XenSource's chief technology officer, says, the company's business model is to sell support and add-on software products on top of that hypervisor layer.

The Xen 3.0 hypervisor, which has the normal tweaks and tucks to make an existing product (in this case, Xen 2.0) work better, is in beta testing now with a bunch of financial services firms and is expected to be generally available in the first quarter of 2006. Crosby says that XenSource will provide RPMs for popular Linux distributions for Xen 3.0, which is necessary because the Xen hypervisor has to be woven into the guts of the Linux kernel so it can do instruction set virtualization. (When these virtualization features are made available in the silicon of future Xeon, Opteron, and Itanium processors, presumably this will no longer be necessary.) Specifically, XenSource will distribute tweaked versions of Red Hat Enterprise Linux 3 and 4 and Novell SUSE Linux Enterprise Server 9. While the SUSE Linux 10 desktop platform has a preview of the Xen code in it, this is not up to the Xen 3.0 snuff. Red Hat Enterprise Linux 5 and SUSE Linux Enterprise Server 10 are expected to include the finished Xen 3.0 hypervisor in the commercial releases from their respective vendors, but SLES 10 is not expected until the middle of 2006 and RHEL 5 is not expected until the end of 2006. "We are going through this interim time when Xen is ready before the distros are ready," says Crosby, but eventually they will all get in synch.

Xen 3.0 is the first iteration of the Xen hypervisor to support Intel's VT virtualization electronics. The new software will also support the Intel Xeon EM64T and AMD Opteron X86-64 64-bit main memory extensions as well as the Physical Address Extensions (PAE) that were created a few years back that allow a server using 32-bit processors to address more than 4 GB of main memory (up to 64 GB, in fact). Xen 3.0 also includes performance enhancements and supports a single virtual machine partition that spans from a fraction of a processor to across 32 processors in a single SMP box.

Xen is not just about Red Hat and Novell Linux running on X86 and X64 iron, of course. IBM is working on a port of the Xen hypervisor for Linux running on its Power-based servers, Hewlett-Packard is working on an Itanium port, and Sun Microsystems is working on a Solaris port for both X64 and Sparc iron. These are not coming out with Xen 3.0, however.

As far as customers and XenSource's investors are concerned, the interesting bit is the fact that the company is launching products that will make the Xen hypervisor more usable and make XenSource some money. With the raw Xen hypervisor, which is free, an administrator has to nonetheless manage each server physical individually, and each set of virtual servers on a physical server basis. XenOptimizer is about fixing that, and it is in fact a set of proprietary programs--which apparently will not be made available on an open source basis--that automate the provisioning of Xen virtual servers and provide fine-grained monitoring and control of processor, memory, I/O, network, and storage resources across networks of servers. Crosby won't say what XenOptimizer will cost, but he does add that the company intends for its software to be "vastly lower" in cost than equivalent software from X86 virtualization juggernaut VMware.

META Looks Ahead to Future Operations Strategies

If you consider yourself a trendy person and your interest lies within the realm of IT operations, you will likely enjoy the forecasting of operations strategies put forth by META Group Research. The brain trust at META, which now collects paychecks with the Gartner name across the top, says factors such as regulatory compliance, mergers and acquisitions, and cost justification initiatives will affect more than 85 percent of IT operations organizations in 2006 and 2007. It's all good, the analysts say, because it will not only "yield a more complete view of IT's operational/support processes, but also enable better role/responsibility alignment and a means of associating governance with those processes."

Configuration management, the process of defining which items and areas to track, is another area seen as having significant benefits. More than 20 percent of IT operations groups will get started down this road in 2006, and by 2009 those projects are expected to produce benefits in area such as inventory tracking/utilization, asset distribution/reuse, risk assessment, and security management.

And don't get too comfortable with your ticket/workflow/authorization change management systems, because it is time to integrate service management into the IT picture. As service desk management combines with configuration management, we will see standardized request/demand management, better-integrated change toolsets, and enterprise master change schedules coming into the mix.

Additional trend-spotting topics include service-level management, operational outsourcing, and model-based management analysis; IT asset management tools are also included in the best-guess look into the future by META Group, too.