Screwed by the cloud: Hardware vendors looking for that raison d'refresh

Four in ten of the servers currently residing in datacenters across the globe are at least six years old. Meanwhile, not only does this 40 percent slice consume 66 percent of the energy used by all bit barns – they also only provide 7 percent of the world's total compute.

This is according to Uptime Institute research outlined by Neil MacDonald, HPE executive Vice President and General Manager of the Compute Division, at the EMEA Discover conference in Barcelona late last year.

MacDonald was on stage trying to cook up the ingredients for a big refresh opportunity - something that traditional hardware vendors, under pressure from cloud providers, are doing more of these days, whether it be for networking or storage.

"I talked to a lot of customers who have extended and extended the life cycle of computing equipment," he said. "That was something that many organizations did during the pandemic, and it's been an ongoing trend. And people do that because they believe that's the most responsible thing to do, run that infrastructure longer. But it actually turns out that that older infrastructure is incredibly inefficient.

"When you look at that inefficiency, and you look not just at the economics on that energy consumption but on the carbon footprint associated with this generation [of servers], in many places, there's a real opportunity to refresh that infrastructure, reduce the energy consumption in an energy constrained world."

One ProLiant Gen 11 server can replace eight ProLiant Generation 8 machines, he said, giving the same compute but 19 percent less power consumption. This is before improved security and manageability are brought into the mix, McDonald pointed out.

"So ultimately, across your organization, even beyond the energy and sustainability benefits, there are efficiency gains to be had by refreshing that equipment and unlocking the capacity in the data set to deploy for other purposes."

HPE rounded off a relatively successful fiscal 2024 ended October 31 [PDF], fuelled by the Compute division. The biz unit grew almost 13 percent year-on-year but a reliance on lower margin sales to hyperscalers and cloud providers meant operating profit in the for Compute was up by just 5.6 percent to $245 million.

Large enterprises are also focused on AI, though they’re buying tech to use it via the cloud, not their own datacenters. Hyperscalers serving up these services are forecast to account for upwards of 60 percent of datacenter capacity by 2029, according to Synergy Research Group.

However, with enterprises looking to train and deploy advanced AI models, more and more CIOs are starting to question if the public cloud is the most cost effective choice to scale these technologies, Alastair Edwards, chief analyst at Canalys, said during the analysts Channel Forum event in EMEA in October.

"Almost no organization these days wants to build their own on-prem datacenter," Edwards said. "They want to have the control, the sovereignty, the security, and compliance, but they want to locate it where they don't have to deal with an increased power requirement, increased need for liquid cooling, which you can't just repurpose an existing datacenter for."

The answer, for some, is to turn to co-location and specialized hosting providers, he added.

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• Nearly 20% of running Microsoft SQL Servers have passed end of support

HPE has a valid point about energy consumption and the rising cost of energy bills, however, with the shifting sands in its traditional customer base the classic ways of convincing enterprise customers to press the buy button on new server purchases isn't the same as it used to be.

HPE isn't alone in facing this challenge. Dell grew revenues on the back of AI server sales, and elsewhere in hardware networking kingpin is dealing with declining fortunes in its classic router and switching shipments.

Yet the public cloud keeps on growing, at least for now and into the near term. Revenues were forecast to jump to $805 billion in 2024 and double by 2028, according to IDC. ®