OpenPower Consortium is IBM’s Answer to Declining Server Market

google-datacenter-places-07_620x413A group of leading high-tech companies, led by IBM, has formed a new alliance to further the development of advanced server technologies that will power a new generation of faster, greener and more efficient data centers.

The OpenPower Consortium, which will initially include Google, NVIDIA, Mellanox and Tyan, will follow the ARM model of allowing the open source development of IBM’s Power chip technology by other companies from server manufacturers to those companies with complex server data centers responsible for running their businesses. Third parties can now use the IBM Power technology as the basis for their own server systems. In addition, IBM will continue to design and manufacture its own servers, unlike competitor ARM who simply licenses its technology to third parties but does not engage in direct manufacturing itself.

Today’s Server Market: A Picture of Decline

Strong competition and market changes are not foreign concepts to the high-tech industry. The constant race to improve technology, make things faster, more powerful or better in some other way is the way of the world for technology companies. Market conditions, economic stimuli and competitors’ actions all have direct influence on trends related to specific products.

Today’s highly competitive global server market has been in a state of decline for some time. The two longtime market leaders, IBM and Hewlett-Packard, have both experienced losses in their shares of the server market in 2013. While other companies, most notably Dell and Cisco, have seen their server sales increase, the overall status of server sales worldwide is down. There are many factors affecting this trend.

• Increased reliance on the cloud—While it is true that cloud-based data centers rely on servers to power them, cloud applications are more efficient which results in less load and demand on servers. More and more companies are looking to the cloud as a key component for their data storage and application power needs.

• Data center consolidation—A challenged global economy pushed companies to find ways to reduce IT costs and assets. More efficient data center operations have led to a need for fewer servers as companies were able to obtain the level of server performance needed with fewer server products.

• Server virtualization—Through the use of software, server virtualization essentially allows one server to provide the functionality of many. This makes it a key component of any data center consolidation and has also directly contributed to the declining server market.

• Weak PC market—PC sales have been at risk for some time and an April 2013 report from IDC revealed the worst decline in PC sales ever. A slow economy, less than positive reception of Windows 8, continued growth in sales of smartphones and tablets and a growing adoption of cloud computing have combined to put the PC market under heavy siege.

It could be said that server manufacturers themselves helped to create a lessened need for their server products by developing those products and technologies associated with cloud computing, data center consolidation and server virtualization. That is not to say that IBM and others should not have focused on such efforts but simply to highlight those factors as clear and logical reasons for the changing market.

How OpenPower Will Help IBM

In order to remain viable in a new server market, reshaping that market will be required. Ultimately, IBM’s goal with the announcement of the OpenPower Consortium is to encourage the development of more energy efficient and powerful cloud computing, led by the open source model. By so doing, IBM is directly responding to the factors that have so greatly influenced the current decline in server sales. Facilitating industry-wide adoption of a focus on the creation of next-generation processing technology will enable companies to develop and implement more energy efficient servers and data centers that deliver more power and yield faster, more streamlined processing. As this happens, a new market will emerge based around these products and technologies.

By allowing use of its Power chip technology by other companies, IBM hopes to breathe new life into its flagging server sales. Revenue from the licenses will be used to further IBM’s own development of the Power technology. Companies leveraging the Power technology can redesign it and customize key data center functionalities to custom fit their specific needs and applications, making the options for market share growth real and virtually unlimited.

Leveraging the Power of ARM Processing

ARM, or Advanced RISC Machine, processing concepts are at the heart of IBM’s OpenPower Consortium plan. The core concept of ARM processing is to implement simplified instructions that yield greater efficiency and, therefore, greater computing power. Additionally, systems built on an ARM platform operate using fewer transistors to deliver the same or increased power.

The reduced number of components and instructions required together contribute to lower costs. Similarly, because end products could have fewer transistors or other components, they generate less heat and use less power, reducing energy costs. Lower costs, increased energy efficiency and smaller form factors make ARM ideal for products requiring portability such as smartphones and tablets. It is also highly used in laptops, digital TVs and other such products.

The Market Will Watch

Customers, competitors and analysts alike will no doubt be carefully watching the path of IBM’s new strategy. What initial consortium members do with their use of the Power chip as well as what advanced IBM itself makes with the chip will give clear signs as to the success of this chosen direction.

Whether highly successful or not, it is clear that IBM needed to take strong action to combat the struggling server market conditions. Their choice to essentially open their intellectual property to others has the potential to be a true game changer in the world of today’s server markets. It hits head-on the need for a more holistic approach to server technology and usage by more closely marrying the development of the server chip with the functionalities of data center consolidation, virtualization and cloud processing.

These components respond directly to the heart of todays’ business marketplace that continues to require more with less, essentially. Less energy used, less money spent on energy costs, more processing power, more efficient operations—such are the mantras propelling today’s successful companies.


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