NTwerks

In an interesting piece by Ryan Nichols at Computerworld yesterday: Cloud computing by the numbers: What do all the statistics mean, Nichols summarizes some recent research findings on the market potential of cloud computing, quoting impressive market forecasts from sources such as Gartner ($150 billion by 2013), Merrill Lynch ($160 billion by 2011),and AMI Partners (SMB spend to approach $100 Billion By 2014).

As part of his analysis, he gives a nod to some of the reasons for this growth, with the need for business agility and the proliferation of mobile and social computing being front and center. At the same time, he identifies a couple of "head scratchers," raising the question: "if virtualization is growing and cloud computing is growing, how can the market for private enterprise servers also be growing?"

It's a great question, and one that we hear frequently given that we are the only company to provide both a server platform, Windows Server, and a cloud services platform, the Windows Azure platform. How can both markets possibly grow at the same time? And growing they are. As Ryan points out, IDC is seeing strong growth in the server market. Just last week the analyst firm issued its Worldwide Quarterly Server Tracker, which showed that "server unit shipments increased 23.8% year over year in 2Q10... representing the fastest year-over-year quarterly server shipment growth in more than five years."

While it may seem contradictory at first blush, there are a number of reasons for this and it is actually pretty straight forward. When we talk to customers, the vast majority of them are thinking about cloud computing and looking at how to bring cloud-like capabilities and benefits (cost savings, elastic scalability, self-service, etc.) into their organization. However, they are all in different stages of the process, with very disparate infrastructure and business needs. And for many organizations, a wholesale move to a public cloud service isn't particularly realistic in the short term, whether it's due to regulatory requirements, geographic concerns, or the nature of the workloads and data they are hosting. 

In addition, there are other organizations that will want to take advantage of the benefits of cloud computing, but also may want to preserve existing infrastructure investments and maintain a level of versatility that can't be met by public clouds Enter the notion of "private clouds" and again, enter Windows Server. We continue to make enhancements to Windows Server to make it easy for customers and partners to use it to build private (and public) cloud services, such as the recent release of System Center Virtual Machine Manager Self-Service Portal 2.0.

Both of these scenarios continue to drive heavy demand for our Windows Server platform. In that same IDC report from last week, Microsoft is highlighted as the server market leader, "with hardware revenue increasing 36.6% and unit shipments increasing 28.2% year over year."" Those are big growth numbers, even with more than 10,000 customers signing up to our Windows Azure platform this year.

So is there still room for enterprise servers in a cloud computing era? Absolutely. The numbers and customers don't lie. Offering both a server and a services platform with onramps to the cloud is at the heart of our business strategy and a reason why we are seeing such success in both areas. For those organizations that want a highly optimized, scalable environment where we prescribe the hardware and normalize the cost of operations, there's our services platform, the Windows Azure platform. For those that want the versatility to enable environments of any scale, or need custom hardware configurations and operating models, there's our server platform, built on Windows Server. And, of course, we have a common application development, identity and management model spanning the two platforms, which doesn't hurt either.

Curious what others think on this topic? What do you think are the reasons for ongoing growth in the server market?