{"id":4377,"date":"2014-01-09T07:00:01","date_gmt":"2014-01-09T15:00:01","guid":{"rendered":"http:\/\/formtek.com\/blog\/?p=4377"},"modified":"2013-12-07T16:22:19","modified_gmt":"2013-12-08T00:22:19","slug":"saas-hardware-vendors-suffer-from-the-success-of-the-cloud","status":"publish","type":"post","link":"https:\/\/formtek.com\/blog\/saas-hardware-vendors-suffer-from-the-success-of-the-cloud\/","title":{"rendered":"SaaS: Hardware Vendors Suffer from the Success of the Cloud"},"content":{"rendered":"

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.<\/p>\n

Frank Gens<\/a>,\u00a0Senior Vice President and Chief Analyst at IDC,\u00a0told ComputerWorld that<\/a>\u00a0“what that means is a lot of people are buying SaaS. \u00a0A lot of capacity is shifting out of the enterprise into cloud service providers.”<\/p>\n

Scott Schemmel<\/a>, vice president of global IT at PGi, provides the details about why businesses are moving to the cloud. \u00a0He\u00a0told SearchDataCenter that<\/a>\u00a0“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. \u00a0We 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.”<\/p>\n

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.<\/p>\n

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. \u00a0Another reason is that companies like Google, Facebook, Rackspace, and Amazon now buy servers directly from\u00a0offshore vendors. \u00a0And the servers that they do buy are often ones that they’ve designed themselves. \u00a0In 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.<\/p>\n

Another reason for falling revenues is that fewer servers are being are simply being sold. \u00a0That’s because technology continues to improve, allowing servers to be ‘denser’ and able to handle larger loads. \u00a0Servers are increasingly being designed to maximize the packing of the available space in the server chassis with high-computing performance components. \u00a0Denser servers mean that when data centers refresh their servers, they often need to buy fewer.<\/p>\n

 <\/p>\n

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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,\u00a0Senior Vice President and Chief Analyst at IDC,\u00a0told ComputerWorld that\u00a0“what…<\/span><\/p>\n

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