Saw this Barron’s post on how the data center market could get a boost.
The two catalysts are: 1) Intel's (ticker: INTC ) new Grantley server platform and 2) the [Microsoft ( MSFT )] Windows Server 2003 expiration. Intel, Hewlett-Packard ( HPQ ), Western Digital ( WDC ), Seagate Technology ( STX ), SanDisk ( SNDK ), F5 Networks (FFIV ) and A10 Networks ( ATEN ) could benefit.
Data-center spending last year declined for the first time since the 2009 banking crisis, falling by 1.4% to $152.8 billion. The appetite for data-center equipment through Intel's lens has been robust for cloud, high-performance computing and telecom customers, with these segments combined growing 20%-plus over the past two years. However, demand from enterprise customers has been underwhelming, declining by 1% on average. Life cycles on enterprise equipment have clearly been stretched, pointing to a large, aging installed base of information-technology (IT) equipment that could be ripe for modernization.
I am bit skeptical on whether this will impact the data center market, and will check with some other people I know. On the other hand, most of the data center people I talk to are open source linux type of people. The point of this Barron’s article is the large 32-bit Windows Server 2003 market that will have have reached end of life.
With industry estimates of roughly 10 million servers that are still running 32-bit applications on WS2003, the installed base is sizeable enough when combined with Grantley power/performance benefits to drive a cyclical recovery even if 35% of these legacy workloads migrated to cloud alternatives.