Is China Hurting U.S. Vendors?

Shipments of servers from Chinese vendors grew at a rapid pace while the top server vendors in the U.S. declined during the first quarter of this year.

Worldwide server shipments were 2.3 million units during the first quarter, growing by just 1.4 percent compared to the same quarter last year, according to Gartner.

Growth was driven by Chinese server vendors Huawei and Inspur Electronics, which were ranked fourth and fifth, respectively, behind the declining Hewlett-Packard, Dell and IBM.

Huawei has been in the top five for server shipments for more than a year, but Inspur Electronics is a new entrant. Inspur builds blade servers, rack servers and supercomputers, and is best known for being involved in the construction of China’s Tianhe-2, which is currently the world’s fastest supercomputer, according to Top500.org.

Chinese servers partly benefitted from the 18 percent shipment growth in the Asia-Pacific region, while shipments in other regions declined, Gartner said in a statement.

Server buying trends have changed in recent years. Companies like Facebook, Google and Amazon, which buy servers by the thousands, are bypassing established server makers and purchasing hardware directly from manufacturers like Quanta and Inventec. That trend in part led to the establishment of the Open Compute Project, a Facebook-led organization that provides server reference designs so companies can design data-center hardware in-house.

Similarly, Chinese cloud providers are building mega data centers and buying servers from local vendors instead of going to the big name brands, said Patrick Moorhead, analyst with Moor Insights and Strategy.

The trend of buying locally is partly due to the security tension between the U.S. and China, but servers from Chinese companies are also cheaper, Moorhead said.

The enterprise infrastructure is also being built out in China, resulting in a big demand for servers. There is also a growing demand for servers from little-known vendors based in Asia — also known as “white box” vendors — in other regions, Moorhead said.

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Apple Previews New Operating System

Apple today released a preview version of Mac OS X 10.7, also known as  Lion, to developers, who can download the new operating system from the Mac App Store.

The preview is developers’ first look at the upgrade scheduled to reach consumers sometime this summer.

Included in the preview, and to be bundled with the operating system when it ships, is Lion Server, Apple’s new server software. One analyst saw that move as an admission by Apple that it hasn’t been able to make inroads into the corporate server market.

“They’ve recognized they’re not going to break into the data center,” said Ezra Gottheil of Technology Business Research. “They’re admitting that what server sales they’ve made in the past have been to very small businesses.”

Currently, Mac OS X Snow Leopard Server is sold separately from the general-purpose edition for $499.

Late last year, Apple killed its Xserve line of rack servers, halting sales of the hardware on Jan. 31, 2011. Instead, Apple now steers customers toward Mac Pro and Mac Mini systems with Leopard Server pre-installed.  The bundling of Lion Server with Mac OS X 10.7 will save customers hundreds of dollars, said Gottheil, assuming Apple sticks to its traditional $129 price point for Lion next summer.

“A very small server should cost about $700 [this summer], not the $1,000 [a server-equipped Mac Mini] costs now,” said Gottheil.

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