Power Plays Spice Up The Competition In Systems

*Editor's Note: This is the second of 10 installments of our 5 Hot-Button Issues series, in which we spotlight five things solution providers should keep an eye on over the coming year in various IT and channel categories.

A cadre of faster, more power-efficient processors -- coupled with deep price cuts -- have caused the tech industry to hope that system sales in the third and fourth quarters will bounce back from a slow second quarter. The refresh is also spurring innovation, ranging from new blade formats to advanced consolidation services to experimentation with co-processors.

Here's a rundown of some hot-button trends, technologies and market developments to track in the hardware arena.

1. Competition In The CPU Market
Fierce competition has its pros and cons. Certainly, solution providers and system builders will reap the benefits of Intel and Advanced Micro Devices' battle for dominance in virtually all system form factors.

Over the past year, AMD has seen a robust boost in market share thanks to a strong price/performance-per-watt story of its processors. That was particularly true in the server space, where AMD held one-quarter of the U.S. server market at the end of the first quarter.Intel, however, has been fighting back aggressively. Over the past few months, Intel has refreshed its CPU line in every segment—including server, mobile and desktop—with its new dual-core Core microarchitecture. Intel promises that all the new chips will run faster and draw less power than its previous iteration of products.

Pricing for the new processors was aggressive as well. Santa Clara, Calif.-based Intel brought out powerful server and desktop CPUs, pricing many of them to move. In desktops, Intel also significantly lowered its older Pentium 4 processors in an effort to grab more of the value space.

That, of course, led to additional price moves from AMD, Sunnyvale, Calif. Some solution providers and system builders have complained that the frequent price moves make it difficult to process bids. With both companies vowing to capture more market share, aggressive pricing tactics should only continue.

2. AMD's Torrenza
In the server space, AMD looks to differentiate itself from Intel with a project code-named Torrenza. The project allows server makers to use either an open socket in a multisocket system or an open AMD HyperTransport link to connect a dedicated co-processor to boost specific vertical applications.

Some system builders have acknowledged testing math co-processors specific to the high-performance computing industry. But AMD said other options exist, such as graphics processors or physics processors for the gaming industry.AMD talked up the technology when it announced plans in late July to acquire graphics maker ATI Technologies. That deal is expected to close in the fourth quarter.

3. Consolidation & Virtualization
Faster and more power-efficient server processors from Intel and AMD, each including instruction sets to speed up virtualization processing, are further propelling the consolidation and virtualization market.

In the past, corporate IT managers were willing to plunk down funds for low-cost x86 servers every time they needed more capacity. Now, tighter IT budgets and heat and power issues in the data center are forcing these same companies to focus on increasing utilization of each server.

As a result of these issues, businesses are looking for more powerful servers that can do more—and that ultimately can be reconfigured on- the-fly as corporate workload needs change. Consolidation deals also often come with lucrative services options.

With more powerful, cooler processors, businesses can get more out of each server and pack more of the servers into the data center. Virtualization allows those servers to run a number of applications and operating systems.As this trend continues, corporate clients will demand that management and configuration of these servers become more dynamic.

4. Blade Servers
This summer, Sun Microsystems, Santa Clara, Calif., jumped back into the blade server market with four-way blades for the data center. Sun joins Armonk, N.Y.-based IBM and Hewlett-Packard, Palo Alto, Calif., in releasing new models this year. Blade servers play into the consolidation model because they pack more processing power in a smaller space, are flexible and are easier to manage than a group of disparate rack-mount servers. Even server system builder SuperMicro plans to get into the act this year.

Analysts as well as solution providers expect the number of models in the market will lead to lower prices. Look for discounts on blade chassis to encourage customers to buy into one of these vendor's specific architectures.5. Momentum Builds For Digital Home
Media servers are still a relatively slow segment, but system builders and home integrators say the category continues to gain momentum.

Microsoft's next operating system, Vista, expected to be available early next year, should give a boost to the platform, some system builders said. It performs much better than Microsoft's current Windows Media Center Edition operating system, some system builders have also said.

Intel, which has been pushing its Viiv brand, is expected to continue the charge. But some in the industry have openly wondered what will happen to Intel's Digital Home division as Intel undertakes an "efficiency" project to reduce costs and increase dexterity internally.

Rival AMD, meanwhile, is expecting its forthcoming acquisition of ATI Technologies to boost its own AMD Live media server platform.