Indian small and medium businesses (SMBs or companies with up to 999 employees) are set to spur more than 20 percent growth in server spending amidst concern of an overall server market slowdown in 2008. The increase in the number of units shipped in the SMB segment will primarily be driven by the expansion of new distributed computing workload deployments. The number of server units shipped in the India SMB market is set to grow a healthy 15 percent according to a recent study conducted by New York-based Access Markets International (AMI) Partners.

"Server technology is constantly evolving to keep pace with ever-changing business requirements and expansion needs of the SMBs," said Partha Sarathi Sengupta, manager – Strategic Market Analysis at AMI Partners. "There is hardly any possibility of spending growth rate to drop significantly in the coming year as the industry is in the phase of rapid infrastructure upgrades."

However, there is change in the outlook by this sector. SMBs, and especially medium businesses (MBs or companies with 100 to 999 staff) have definitely moved up in the value chain and are now looking at a consolidated approach where the server should be able to do multi-level complex tasks resulting in higher optimisation of IT investments and lowering TCO.

"Blade servers are making inroads into the traditional rack and tower servers," observed Sengupta. "These new generation servers that consume less power and occupy less space, are gradually gaining increased acceptance in the Indian SMB marketplace as customers look to minimise their energy and operational costs while expanding their IT infrastructure."

"The x86 and x86-64 servers are emerging as the ideal server platforms for Indian SMBs running enterprise applications," added Sengupta. The trend of server virtualisation is also catching up among the Indian SMBs and the impact of virtualisation is more on x86 servers.

However, there is huge opportunity at the entry level servers especially among small businesses (SBs or companies with up to 99 staff). Small businesses even in the upcountry markets are looking for a robust infrastructure for their business needs and are investing in technology solutions.

A recent AMI study reveals that over 35 percent of PC-owning Indian small businesses in the 20-99 employee segment are planning to purchase servers for the first time this year. Apart from traditional vertical markets like BFSI, telecom and manufacturing, businesses in the construction and media/entertainment verticals will have a significant impact on server market growth.