The most popular and comprehensive Open Source ECM platform
Let us know more
SaaS: Hardware Vendors Suffer from the Success of the Cloud
25 to 35 percent of all servers shipped this year are being sent to cloud providers, and by 2017, the percentage will increase to 45, or close to half.
Frank Gens, Senior Vice President and Chief Analyst at IDC, told ComputerWorld that “what that means is a lot of people are buying SaaS. A lot of capacity is shifting out of the enterprise into cloud service providers.”
Scott Schemmel, vice president of global IT at PGi, provides the details about why businesses are moving to the cloud. He told SearchDataCenter that “there’s a lot of plumbing work involved with maintaining your own data center, whether it’s racking hardware or patching applications, and frankly there’s not a lot of value in that. We can’t match cloud vendors on price or compute power so when it comes down to it, it makes more sense to leverage them for running our workloads rather than buy servers ourselves.”
But interestingly, even while cloud vendors are buying large numbers of servers, server revenues dropped by 3.5 percent in 2013 to $12.1 billion. That’s the third year of shrinking revenues.
One of the reasons for the drop in revenues is that because cloud providers purchase massive numbers of servers, they are able to negotiate significant cost savings on the machines that they do buy. Another reason is that companies like Google, Facebook, Rackspace, and Amazon now buy servers directly from offshore vendors. And the servers that they do buy are often ones that they’ve designed themselves. In this way, these large internet companies can bypass standard hardware vendors like IBM, Dell, and HP, and pay much cheaper prices than they would with brand-name vendors.
Another reason for falling revenues is that fewer servers are being are simply being sold. That’s because technology continues to improve, allowing servers to be ‘denser’ and able to handle larger loads. Servers are increasingly being designed to maximize the packing of the available space in the server chassis with high-computing performance components. Denser servers mean that when data centers refresh their servers, they often need to buy fewer.
