IDC Sees Steady Growth for HPC in Q2

By Michael Feldman

September 9, 2008

On Tuesday, IDC reported some encouraging numbers for the HPC server market for the second quarter of 2008. The analyst group estimated that server revenue was 10 percent greater in Q2 compared to Q1, and 4 percent greater compared to the same quarter in 2007. Shipment units actually dropped slightly — down 5 percent from Q1 — but since customers ended up buying more expensive gear, revenue rose.

According to IDC, Hewlett-Packard was the clear revenue leader in this market in Q1. HP had 37 percent of the HPC server revenue share compared to 27 percent for IBM and 16 percent for Dell. In 2007, IDC pegged HP and IBM dead even in HPC server revenue (about 33 percent each), but for the past few quarters HP has pulled ahead.

Growth in the HPC server market is benefitting from the popularity of clusters and the introduction of ever more powerful CPUs. The dominance of multicore technology is contributing to fatter (and more expensive) compute nodes, which is keeping revenue numbers above water despite a drop in server units shipped. This seems to reflect what’s happening in the broader server market, where much of the Q2 growth was also at the high end — systems of $500K and up.

It’s worth mentioning that IDC has changed the way it tracks HPC server revenue. The firm said it has refined its methodology by “more clearly separating out non-server revenue items like storage, software and services” and by “using both HPC data and IDC’s broader enterprise server analysis and data sources.” Reading between the lines, that means that IDC probably had previously tallied non-server revenue as server revenue, and may also have cross-reported some HPC and non-HPC server revenue in both categories.

As one might suspect, the new methodology revealed that the 2007 HPC server numbers were inflated. Instead of the $11.5 billion market they originally claimed for 2007, IDC now thinks the HPC server market was probably more like $10 billion. Despite the adjustment, the analyst firm still thinks the HPC server market is growing at a CAGR of 9.2 percent. But with the new baseline, the market is not expected to hit $15.6 billion until 2012. The old projections had the market achieving $15.3 billion in 2010.

If you look at the revenue numbers for the second quarter, the global economic slowdown doesn’t seem to have affected server sales — HPC or otherwise. The reasoning IDC gives for the HPC space is that government and university buyers are shielded from the worst effects of a sluggish economy. At the same time, commercial buyers are using new technology acquisitions to improve the bottom line.

I would guess that even in tough times the continued improvement in server price-performance is probably too hard to ignore for most commercial and non-commercial HPC users, since skipping an upgrade cycle yields too much competitive advantage to your competition. In the current climate, if cost-cutting becomes an issue, most organizations seem inclined to jettison personnel rather than computing gear. That might make it seem like HPC is recession-proof, but in a severe downturn, demand for computing would begin to evaporate. At that point, negative growth would be almost impossible to avoid.

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