The Indian server market was poised at USD 141.5 million during the second quarter of 2009, registering an annual decline of 31.6 percent this year. That said, the market managed to post a sequential growth of 7.3 percent this quarter, which can be interpreted as early signs of initial recovery in the hardware market. India is all set to witness a boom in data center deployment. While Gartner has forecast a growth in the floor area occupied by data centers from 1.337 million sq ft in 2007 to 5.143 million sq ft by 2012, some vendors feel that the market could outgrow these projections simply because a number of new markets have emerged since the Gartner report was published.

According to Vinnie Mehta, Executive Director, MAIT, “In 2008, we witnessed a lot of consolidations taking place, primarily due to the recession, as people were getting conscious about new investments. We did not see much expansion taking place. The market would remain stable while growth would not be seen.”

Growth drivers

The IT and ITeS sectors have also witnessed a lot of server consolidation projects, virtualization and server refreshes. The telecom sector is continuing to do well due to an increasing subscriber base. New 3G deployments are also being adopted by the telecom companies, which are increasing server deployments. VAS and SMS-related services continue to be server-hungry verticals.

In June 2009, SEBI announced that it would apply stringent business continuity guidelines to not just the country’s exchanges but also to other BFSI establishments (including depository service providers and online trading firms) that provide services for customers to trade on the different stock exchanges in the country. The directive will now automatically require all these institutions to have a data center and a disaster recovery center.

Similarly, in its business continuity guidelines, RBI has emphasized the need for proper data centers and disaster recovery centers. Its directive is presently applicable to around 90 banks that use the National Electronic Funds Transfer system. However, RBI is shortly expected to send an advisory to other banks as well.

Another big driver for growth comes from the Indian government. The government’s department of Information Technology has approved the establishment of state data centers in 27 states across the country. It will invest a total of Rs 1,237 crore for this purpose. In addition, individual departments at the Centre and the states have their own plans for setting up data centers.

Yet another driver for growth is the fact that in the enterprise segments, the tolerance for downtime is shrinking rapidly as businesses become highly dependent on IT. Customers are not allowing scheduled downtime for maintenance activities since IT is becoming an essential part of their business. This is seen especially in banks, where the infrastructure runs the entire year round. The servers thus need to have the kind of software that enables automated housekeeping work and takes preemptive action to eliminate any system problems. The software would have in-built alert systems, which would give prior information to the system administrators and managers.

The power factor
Whenever TCO was spoken about in the past, one discussed acquisition and maintenance costs related to the lifecycle of the product. Today, this is only one part of the equation. Organizations need to be aware of the power and cooling requirements of their infrastructure. CIOs are also concerned about how much floor area the server is going to occupy.

The top focus of any Original Equipment Manufacturer (OEM) has been the power consumed by the IT infrastructure. This has become the most important issue for data center managers. Approximately 50 percent of the expenditure on a data center relates to power. The biggest technology driver today in terms of how new technologies would come in, is being driven by power consumption—be it processor, memory, physical appearance of a server, power supply or fan design. A lot of R&D spending being done by OEMs is centered on power efficiency.

Says Mehta, “As severs can be power guzzlers, it is essential to look at more energy-efficient servers. However, there is a fine line between affordability and opting for green technology. While, in the long term, it would definitely be a wise decision to have invested in green technology, often smaller companies are not able to afford the upfront costs.” Thus financing becomes an important tool to give the market the much desired momentum. Many vendors are already offering finance options along with their offerings.

Emerging trends
While server virtualization goes mainstream, Virtualization is gaining traction at different levels. For example, this is seen in the form of storage virtualization, desktop virtualization, network virtualization etc. The concept of Cloud Computing is being fueled by the growing computing demands of enterprises having virtualized data centers and those that are looking at pushing extra workload—for example, high SMS volumes during festivals—to the cloud. However, Nareshchandra Singh, Principal Research Analyst, Gartner, argues that the high costs of cloud at the moment could restrict the growth. Even the bandwidth costs need to be reduced, as lower bandwidth often becomes a bottleneck for cloud infrastructure.

Another emerging concept is Unified Computing, which is being promoted by Cisco (with other players now joining in as well). “Essentially the concept is about unifying the fabric on the network and the storage/server side, which is a good goal to achieve. Cisco and Brocade are trying to unify the two networks of storage and network and have a common adapter for the two. This would mean a lot of saving in cabling as well as adapters. However, the switching equipment could end up being higher and thus the total cost of ownership needs to be looked at carefully,” explains Singh.

“There needs to be a standardized approach to this instead of a proprietary approach. However, standardization would take a lot of time. The Unified Computing solutions available today could lead to vendor lock-in as the different offerings don’t work with each other,” adds Singh.
Going forward, it will be interesting to see how the concept shapes up.