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It is clear that x86-based server deployment patterns are changing dramatically in the market today. The rapid emergence of multicore architectures and virtualization technologies is significantly restricting worldwide x86 server shipments. According to IDC's updated forecast, multicore and virtualization will cost the x86 market more than 4.5 million shipments and $2.4 billion in customer spending between 2006-2010. Overall, x86 shipments that were once projected to increase 61 percent by 2010 are now facing just 39 percent growth during that same period. "The server market is at a crossroads and customer buying behavior is increasingly driven by the strategic business benefit of the IT investment rather than a singular focus on cost containment," said Matt Eastwood, program vice president for IDC's Enterprise Platforms Group. "In today's business environment, it is clear that technologies such as virtualization and multicore are particularly important enablers for the consolidated IT infrastructure IT organizations are increasingly seeking to deploy." "Each of these technologies is impactful to the market in their own right. However, the use of multi-core technology in conjunction with server virtualization tools has a compounding impact on server configurations, and accelerates the ability of IT organizations to exploit the benefits of multi-core technology," said Michelle Bailey, research vice president for IDC's Enterprise Platforms and Datacenter Trends. "Unlike other previous multicore introductions that took time to become mainstream as customers changed their application code, virtualization allows customers to fully exploit the improvements in x86 processors immediately, accelerating business benefits and thereby increasing adoption rates." Looking forward, IDC believes the server and component vendors will optimize around quad-core technology before moving ahead to octi-core technology. Other highlights from this study include:

• Server revenue growth rates will be lower in comparison, but are reduced to a lesser extent than shipment growth rates as customers deploy more richly configured systems in terms of memory, disk, and I/O to balance the increase in processing and server utilization.
• Despite the decline in the number of physical shipments, over the forecast period, growth in the number of effective processors continues to climb at a 25 percent annual rate due to multi-core technology advances.
• The number of virtual servers rises dramatically at a CAGR of 40.6 percent during 2005-2010 so that by the end of the forecast period, more than 1.7 million physical servers will be shipped for virtualization activities resulting in 7.9 million logical servers. This represents 14.6 percent of all physical servers in 2010 compared to just 4.5 percent of server shipments in 2005.

IDC's Virtualization and Multicore Innovations Disrupt the Worldwide Server Market (IDC #206035), delivered in conjunction with the Worldwide Quarterly Server Forecast Q406, 2007-2011, with the purpose of providing IDC insight and background information on the market impact of multicore and virtualization. For more information about IDC's Worldwide Quarterly Server Forecast, please contact Hey-Sung Han at 508-935-4026 or hshan@idc.com.