Server sales get a boost from regulatory demands in banking sector

IBM retains top spot

The financial services industry is Australia's biggest spending vertical market when it comes to investing in server infrastructure, according to Gartner.

Local banks and investment firms spent $39.4 million on servers in 2005 and this figure is expected to spiral to more than $45 million in 2010.

For the entire Asia Pacific region, the financial services industry accounted for 20 percent of all server revenue in 2006.

The communications sector came in a distant second with 14 percent of total server revenue, followed by government at 13 percent.

Gartner research vice president, Jennifer Wu, the financial services market is the leader for total IT spending and the server market is no exception, especially in emerging markets like China and India.

"In 2006, many financial institutions in mature markets like Japan and Australia faced challenges of operational risk management and regulatory requirements, which led to structural changes, which in turn resulted in more server sales," Wu said.

Uko Tian, principal analyst at Gartner in China, said that competition in the banking sector had become fierce after three of China's top four banks listed on the public market.

"It resulted in a need to increase the speed of doing business in response the market and to improve management information," he said.

"Initiatives like application and data consolidation as well as implementing applications like ERP are now going on in the banks. All of these deployments require an investment in IT infrastructure and hence more servers."

IBM is easily the biggest supplier of servers to the financial services market, accounting for 42 percent of server revenue in 2006.

Hewlett-Packard was the number two vendor in this market with 22 percent market share, followed by Fujitsu/Fujitsu Siemens in a distant third place at 11 percent.

Despite increased revenues for 2006, analyst firm IDC released a report earlier this year warning of slumping demand.

IDC said server vendors are stumbling with growth slowing. The main culprit is virtualization, as corporate IT managers learn to save money by sharing a shrinking pool of hardware resources.

That trend has hit the x86 segment the hardest, putting a dent in revenue for chipmakers such as Intel and Advanced Micro Devices (AMD).

Another factor is the greening of IT as organizations try to reduce energy consumption.

The last decade as seen a massive growth in power use due to increases in the number of servers being installed and stacked in data centres as demand for computer services accelerate.

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