Hardware spending is on a continual downward spiral and will drop from 14 per cent to 11.4 per cent of global IT sales by 2011, according to Gartner analysts.
Speaking at the Gartner Symposium in Sydney, vice-president and analyst, Phil Sargeant, said key user challenges affecting hardware sales included doing more for less, agility and flexibility, aligning business with IT spending and resources and achieving measurability and compliance. Margin squeeze, along with an influx of competitors jockeying for position in the SMB market, were also tightening market conditions for vendors, he said. Not surprisingly, Gartner's global figures show hardware to have the slowest year-on-year growth of 1.5 per cent. The analyst group predicts the highest growth areas for the next five years will be IT services and telecommunications.
Despite this, Sargeant said PC demand would be sustained because of the important role it played in personal productivity. He forecast mobile PCs shipments would outstrip desktop PC shipments in Australia by 2009.
"As we've reached saturation points in mature markets like Australia, we're seeing people start to go for different form factors," he said. Other long-term influences on the PC market included desktop virtualisation, integrating alternative delivery models and power and cooling, Sargeant said.
"Users want to reduce total cost of ownership, integrate client portfolios and have device ownership. While we're not seeing huge traction yet in client virtualisation, it will develop over the next 2-3 years," he said. "Power and cooling have been a focus in the datacentre, but with the huge cost of client ownership, this issue will also become something vendors start to focus on [in the PC market]."
At the higher end of the spectrum, Gartner reported server hardware sales would flatline as users looked to consolidation and management technologies. According to the analyst group's 2006 report, server sales in Australia grew by 10 per cent year-on-year to reach $690 million. "Server sales in Australia differ quarter to quarter - what is changing the dynamic is the move towards virtualisation," he said. "Utilisation has gone up, and server vendors are taking a hit. More multi-core machines have also been introduced.
"Users are growing capacity without growing budgets. Virtualisation is ubiquitous and will be the way people run their datacentre and servers over the next three years. Without a virtualisation strategy, vendors are going to be behind the eight ball.
"There will be commoditisation in the server area, particularly at the x86 end. The differentiator will not be the technology, but the services or pricing."
Storage capacity, however, would continue to climb at an average of 60 per cent year-on-year in Australia as users tried to cope with online data growth, compliance and security issues, Sargeant said. Mid-range storage for SMBs with annual storage budgets of $US25,000-$US100,000 presented increasingly bigger opportunities for vendors and partners.
He said virtual tape libraries, thin provisioning, data deduplication, and virtualisation were key user technologies.
Sargeant said a shift from point products towards unified architecture would be a major influence on storage use by 2011.
Consolidation across PC, server and storage hardware markets would be inevitable, he said, as vendors tried to find new revenue streams, improve supply chain efficiencies and strive for competitive advantage. He also forecast a rise in hardware-as-a-service offerings.