Who’s At Risk From Slowing Enterprise Server Shipments?

By Teresa Rivas

Morgan Stanley's Katy Huberty her team and write that they expect enterprise server shipments to slow, thanks to increasing virtualization and the cloud.

Krisztian Bocsi/Bloomberg News

This comes after several years of 3% to 5% growth in this area, and these trends will be compounded by tough comparisons following the Grantley cycle and the expiation of Microsoft (MSFT) Windows Server 2003 support last year.

As a result, they write that they're more cautious on Levono and Hewlett Packard Enterprise (HPE) in the near-term.

Huberty writes that the trends in storage provide a good roadmap: Growth for external storage systems dissipated last year as flash-based products and the cloud ate into business, a time when enterprise server shipments were still growing at 7% year over year.  "Over time, we expect spending on storage and servers to experience a more consistent trend and therefore see more downside to enterprise server growth in 2016."

More of her thoughts on the cloud, from the note:

Accelerated cloud migration a structural hit to long-term server growth. As cloud adoption hits the important 20% penetration level, we see signs of enterprises shifting workloads to cloud at a faster pace. This has a negative impact on server growth as larger cloud providers run at higher utilization rates. As a result, we don't see the shift from on-premise to cloud datacenters as a 1:1 replacement. Rather, utilization rates are 80%+ in cloud vs. 15-20% in enterprise, suggesting one cloud server can replace 4-5 on-premise servers, on average. What's more, AWS no longer purchases servers from OEMs, like Hewlett Packard Enterprise, choosing to go direct to manufacturers in Asia for cheaper solutions. Other hyperscale companies may follow Amazon's (AMZN) lead. The unit deflation from cloud adoption adds to the headwind from higher utilization rates due to virtualization which continues to weigh on server hardware growth, as cited by CDW in the March quarter.

Given that HPE and Levono count on servers for about 28% and 10% of their sales, Huberty writes that they are most at risk, while Intel (INTC) could benefit from growing cloud spending.

Source ↔ Download MP3 Terbaru

Comments

Post a Comment

Popular Posts

Unwanted Windows 10 upgrade costs Microsoft $10,000 through lawsuit

Image
Unwanted Windows 10 upgrade costs Microsoft $10,000 through lawsuit . Microsoft has been forced to compensate a user for the automatic and unwanted installation of Windows 10 on their computer. Teri Goldstein, the operator of a Californian travel agency, was awarded $10,000 through a lawsuit that alleged the forced installation caused her PC to become slow and unusable. Goldstein was seeking damages for lost wages and the cost of a new PC after Microsoft support failed to adequately resolve the issue. Microsoft initially appealed the judgment, but withdrew the appeal last month to "avoid the expense of further litigation". While Windows 10 has been positively received since its launch last year, many users have been complaining about Microsoft's aggressive update methods on previous operating systems, particularly Windows 7. Microsoft has been sending a never ending wave of update nags to Windows 7 users, and in some cases Windows 10 has been installed automatically....
Read more