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Server Refresh or Cloud Services? It’s Better in the Cloud

May 30, 2014

The recession of 2008 put a major squeeze on IT budgets and postponed investments in infrastructure improvement. When a degree of normalcy returned around 2011, infrastructure consolidation and widespread virtualization on updated server technology came off the back burner.

Fast forward. It’s server refresh time. Intel has been busy, having recently announced four-socket enabled  E5-4600 v2 and E5-2400 v2 processor families, as well as dual-socket enabled Xeon E7 v2 (Ivy Bridge EX) with up to 15 cores and E5-2600 v2. Traditional and upstart server vendors can make compelling cases pressing for “out with the old, in with the new.” Accomplish more work without taxing floor/rack space or power consumption any more than you already do.

Expect that vendors will be pushing hard, too. 2013 was not a good year for the industry in terms of revenues, showing four consecutive quarters of decline, or about 4.5 percent for the year. They are betting 2014 will be the year of the tech refresh, that three- to four-year ritual anxiously anticipated by server makers.

They also know that, even as 2013 revenues declined, unit orders for servers increased. Mega-scale cloud deployments were responsible for most of that unit growth with much of that from non-traditional vendors. In other words, cloud service providers (CSPs) were investing in new server technology while many enterprises were not. CSPs must invest as a matter of course in order to keep up with rapidly ramping demand for cloud services. It won’t be long before this phenomenon dips even more deeply into the pockets of server vendors.

Had you been a customer of one of these providers, you already would have been using the latest server technology instead of planning to invest in new hardware all over again. You could be using that expensive real estate for revenue-generating activities, with a significant reduction in power consumption, as well. All the care and feeding of those servers would be passed to someone else, leaving you and your staff time to address more important business-centric tasks.

It’s interesting that a big winner last year in terms of server revenue and unit growth was Peak 10’s technology partner, Cisco. Its Unified Computing System (UCS) unifies computing, networking, management, virtualization and storage access into a single integrated architecture; servers are a key component. The infrastructures of Peak 10’s data centers employ the UCS architecture. An investment such as this is beyond the needs or means of many mid-size companies to consider on their own, so Peak 10 provides it to them in a shared multi-tenant environment. That’s just part of the cloud advantage.

Instead of 2014 being the year of tech refresh perhaps a tech restart may be more in order, beginning with Infrastructure as a Service (IaaS). With virtualization now well established throughout most enterprises, offloading virtual workloads to the cloud is easily and safely done; so are physical-to-virtual migrations.

Many enterprises will want to keep certain critical computing assets under their direct control; they may wish to make select server investments for legacy applications and operating systems. Or, do so as part of a private cloud implementation in anticipation of a future hybrid cloud infrastructure.

However, with the speed of innovation, the criticality of business agility and flexibility, and the abundance of new solutions coming to market, the idea of waiting out a tech refresh cycle is less and less viable. Ladies and gentlemen, (re)start your engines.

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About Peak 10

"Our values are the foundation for everything we do at Peak 10, and are ultimately what enable us to earn our customers' business and their trust."
David H. Jones,
Board Member, Peak 10 + ViaWest