In 2010, the server market in Asia-Pacific emerged from the downturn of 2009 positively, growing by 18.9 per cent in shipments and 18.1 per cent in revenue. The growth was driven by robust demand in both emerging and developed markets in Asia-Pacific. Gartner expects that positive server spending trends will continue into 2011.
Demand from developed markets has increased. We expect virtualisation adoption will continue to be a negative factor for server shipments in Australia, South Korea, Hong Kong, Singapore and Taiwan, although there is still a strong level of market demand to offset the negative effect.
In the first quarter of 2011, mainframe customers in countries such as Singapore, China, Taiwan and Korea continued to invest, which contributed significantly to overall market growth. Total local server shipments grew modestly in the Q1 – with server revenue up by 10 per cent, although shipments fell 5 per cent from the same quarter in 2010.
Despite limiting server shipment numbers, the increasing adoption of virtualisation in Asia-Pacific drives richer configuration of x86 servers, leading to higher server average selling prices (ASPs). In Australia, x86 revenue grew by 43 per cent in 2010, while server shipments grew by 9 per cent. Gartner expects the ASPs of x86 servers will continue to increase in 2011, as virtualisation adoption increases in other emerging markets beyond China and India.
Demand from telecommunications service providers and Internet companies has stimulated the x86 server market. This category, including telecom carriers and independent datacentre service providers, provide datacentre hosting and outsourcing service and have always been a significant buyer of servers in Asia-Pacific. More recently, increased server demand has been driven by non-domestic providers investing in the region – such as Amazon Web Services.
Foreign xSP investment has also helped stimulate an already growing inclination among local xSPs to consider or accelerate investment to build cloud or cloudlike services.
Developed markets like Australia continue to drive cost containment initiatives. As a result, there is an increasing demand for more efficient and cost-effective infrastructure. Vendors need to focus on the value of integrated or modular products as a solution to help customers achieve cost containment goals.
A/NZ is a mature IT market and has exhibited steady growth for years. These countries emerged from the cost-cutting initiatives of 2009 with an increase of 24 per cent year-over-year in revenue terms and 6 per cent growth in unit shipments in 2010, compared with a decline of 15 per cent in revenue and 24 per cent in units in 2009.
A large part of its growth in the second half of 2010 was driven by the mainframe market due to a major product refresh started in the third quarter of 2010. In Q4 2010, the revenue share of mainframes in the A/NZ server market was 34 per cent, the highest of the past five years. Major customers were from the finance industries. Gartner expects that this momentum will continue into the first half of 2011.
A/NZ will have the highest adoption of virtualisation in Asia-Pacific, and virtualisation will continue to play an important role in 2011 for the server market. Server vendors should expect low unit growth, but opportunity to sell richly configured servers, as well as consulting services for virtualisation customers looking beyond consolidation towards building flexible, virtual infrastructures and private clouds.
Erica Gadjuli is a principal analyst at Gartner