Opportunities and Trends In The HPC Technical Computing Market

1. Earl Joseph II IDC Research Vice President Email: hpc@idc.com Web: www.idc.com/hpc Opportunities and Trends In The HPC Technical Computing Market

2. IDC is Focused on IT • 40 years of experience in IT market research • Founded in 1964 • Over 700 analysts worldwide • Quality primary research and methodologies • More than 350,000 surveys/year • Quarterly census data and reporting • A global/local IT research company • 53 offices in 47 countries • Check us out at: www.idc.com and www.hpcuserforum.com

3. IDC Research Areas TCS: Technical Computing Solutions Enterprise Systems Technical HPC Global Research Workstations Services Software Internet Channels Verticals Personal Systems Consumer and Small Business Networking and Telecommunications Components and Peripherals

4. What Are HPC Technical Servers? • IDC now uses these terms to cover all technical servers used by scientists, engineers, financial analysts and others: • HPC • HPTC • Technical Servers • Highly computational servers • Highly data intensive servers • HPC covers all computers that are used for highly computational or data intensive tasks

5. IDC HPC Census Database – What We Track • Data segmentation information includes: • Competitive segments • Price bands • Application distribution • Memory architecture/cluster • Processor type/brand/model • CPU count, maximum, average • O/S distribution • Regional distribution

6. Market Trends: Technical Computing Market Growth

7. IDC’s HPC Market Definitions • Technical Capability • Systems configured and purchased to solve the largest most demanding problems • Technical Enterprise • Systems purchased to support technical applications in throughput environments selling for $1 million or more • Technical Divisional • Systems purchased for throughput environments selling from $250,000 to $999,000 • Technical Departmental • Systems purchased for throughput environments selling for $50,000 to $250,000 • Technical Workgroup • Has been added for systems under $50,000

8. Overview: The New Realities • Major market growth over the last two years (49%) • Clusters have been a disruptive force • 1/3 of the market in 2004 • Now 1/2 of the market • Caused a growth revolution, not a decline • Capability market transition continues • Down 29% over last 2 years • Bio-Sciences & government markets are still growth areas • Grids are growing

9. HPTC 2004 Market Highlights • Strong market performance • Revenue = $7.25B, Growth = 30.2% • Units = 155,596, Growth = 70.2% • ASP = $46.6K, Decline = -23.5% • Drivers: • Market rebounds for the second year with growing budgets and new customers • Potential development of new low-end market based on tipping point in price/performance

10. Revenue by Competitive Segment ($M) • Revenue growth favors the low-end: • Capability: declined –4.0% • Enterprise: grew 44.5% • Divisional: grew 24.6% • Departmental: grew 22.7% • Workgroup: grew 64.6%

11. 2004 Overall Revenue Share By Vendor • HP and IBM are virtually tied • Sun is #3 overall • Japanese vendors continue to decline • Dell and Tier 2’s are the new growing entrants

12. 2004 Capability Segment Revenue Share, ($747M Total Revenue) • IBM leads the segment • Market has high variability and is missing larger system sales

13. 2004 Technical Enterprise Segment Revenue Share, ($1,259M Total) • IBM and HP now lead this segment • Sun was the leader a few years ago

14. Processor Evolution or is it a Revolution?HPC Revenue Share by Processor Type • What will be the impacts of multi-core technologies? • Room for a new processor type? x86?

15. Application/Industry Segments

16. Market Trends: 5 Year Forecasts

17. Key Forecast Assumptions • Economic recovery continues • HPC economies stay in a moderate growth mode • No major new disruptions • HPC resiliency • Research and Development is necessary for product cycles • Government spending is expected to stay strong • Biosciences markets continue to grow • But at lower rates • Cluster sales continue to grow at above market rates • X86-32/64 continues to grow

18. Worldwide High-Performance Systems Forecast by Revenue by Segment 04-09 2004 2005 2006 2007 2008 2009 CAGR TCAB 747,187 854,781 840,445 883,282 905,528 923,285 4.3% TENT 1,258,700 1,354,399 1,434,007 1,481,235 1,518,352 1,570,192 4.5% TDIV 1,494,741 1,606,833 1,757,964 1,869,093 1,962,991 2,041,315 6.4% TDEPT 2,123,430 2,361,138 2,621,866 2,803,751 2,957,422 3,105,321 7.9% TWGP 1,626,314 1,813,048 1,976,134 2,101,216 2,264,122 2,441,476 8.5% Total 7,250,372 7,990,199 8,630,415 9,138,577 9,608,415 10,081,589 6.8% Source: IDC 2005 Preliminary Technical Server Forecasts • What are the revolutions that will change these trends?

19. Opportunities

20. Possibilities • There are many opportunities in software • Grids • Internal, external, redefining workload management, … • Applications, middleware, … • Hardware capabilities are already way ahead of software • Clusters & COTS technologies are reshaping the market • What will be the next wave? • Multi-core technologies will redefine system balance • Opening the door to entirely different ways to use computers • How would you use a 32-way SMP chip? How about a 100 of them in a single box?

21. Opportunities:Grids

22. Definitions: Clusters and Grids • A set of independent computers combined into a unified system through systems software, and networking technologies • Clusters vs. Grids: Different ends of same spectrum • Clusters: • Dedicate components -- All components are exclusively “owned” and managed as part of the cluster • Grid: • Virtual system -- Configured from components that are generally managed and used both as part of the grid and as independent systems

23. Grid Computing: Definitions • Grid is an evolution of distributed computing • Dynamic and virtual • Geographically independent • Built around standards • Uses the Internet as the backbone

24. Grid Drivers: New Capabilities • Virtual organizations – Enables collaborations • New organization structures via new infrastructure • Collaborative computing • New business models • Outsourcing of computing tasks • Utility computing business • Peak load support • Catastrophe planning • Price/Performance • Maximize existing resources • Maximize return on capital

25. IDC Grid Market View • Grids represent an advanced implementation/unique way to use existing servers • And the system value is recorded as individual system or cluster sales • At a system level Grid revenue charts show the value of systems that are active on at least one Grid • This is a different view of the existing market based on how systems are being used • This is non-additive hardware revenue and is similar to segmenting the market by OS • Additional revenue is collected and analyzed for software and Grid services

26. Definitions: An Active Grid Is… • For a computer to be considered “Grid active," we require that some part of it can be accessed as a resource, over the Grid, at some time: • The computer need not be available to the Grid full-time • Only a portion of the total resources (CPU time, I/O capacity, data capacity, etc.) might be available • It is not required that applications are distributed across multiple Grid nodes

27. Active TECHNICAL Grid Market Penetration • 2004 to 2008 CAGR = 55.6%

28. Industrial Use of Grids • In 2004 the usage was growing from a small base: • Lead by manufacturing and government sectors • But only a few hundreds of millions worth of computers actively on a Grid • With stronger university use in technical computing • By 2007 we expect: • Manufacturing to reach over $3.5 billion worth of computers actively on a Grid • Financial services close to $1.5 billion worth of computers actively on a Grid

29. Market & Technology Inhibitors For Grid Adoption • The greatest inhibitor identified was organizational • The cultural challenges to think about compute resources in a new way and the sharing of those resources across potentially multiple business units or organizations represent the greatest impediment to commercial grid adoption • The general lack of tools and industry standards has led many sites to think of grids as having large costs • Which in turn implied the mitigation of any infrastructure cost savings • Security is also identified as a major inhibitor to broad commercial adoption of grid technology

30. Opportunities:Clusters & COTS

31. Cluster Overview: The New Realities • Clusters: the market grew faster than expected: • Performance now fits many job sizes • Price continues as a key driver • New approaches to conducting science and engineering • ½ node job size works well • 2x growth in revenues • 1/3 of the market in 2004 • Now half the market in Q1 2005

32. Market Drivers for Clusters • Absolute node level performance • Moore’s Law at work • Multi-core provides interesting options • Price/Performance as throughput engines • Single problem per node computing • Maximizes management flexibility • Best solution for highly parallel applications • Potential for dramatic changes in market structure • Linux • Breaks O/S binding to vendor • Provides for greater sharing of software

33. Why Is Commodity Hot? … Price HPC All Servers Processor Summary • Notes: • If 32-bit is good enough it will win • If 64-bit is required, IA-64 has a 3-to1 advantage

34. A Revolution: HPC Cluster Revenue Growth

35. Cluster Revenue Share of Market

36. HPC Clusters Revenue Share by Vendor

37. HPC Capability Cluster Revenue Share by Vendor

38. HPC Enterprise Cluster Revenue Share by Vendor

39. HPC Divisional Cluster Revenue Share by Vendor

40. HPC Departmental Cluster Revenue Share by Vendor

41. New Possibilities: HPC Clusters Revenue Share by Processor Type X86-64 held a 50% share in Q105

42. HPC Clusters Revenue Share by Region

43. Summary Thoughts

44. Overall HPC Market Trends • Commodity processors & systems now dominate • Custom processors & systems aren’t material in market size, but provide unique capabilities • Hardware alone is becoming less important • HPC Growth industries: Bio-Sciences and defense • Long term growth is projected in all 5 IDC segments • GRIDs and clusters are the high growth technologies • And now part of the mainstream in technical HPC

45. Opportunities Exist In All Areas • Software • Applications • Grids • Middleware • COTS/Standards Based Hardware Technologies Are Opening New Doors • Clusters • Multi-core • New types of processors (but still x86?) • And New Services Will Be Required In Many Areas

46. Essential Guidance • For Vendors: • Expect to see continued price pressures • But configurations are getting richer • Look for strong growth, especially at lower price levels • New buyers are entering the market with a new set of expectations • For Users: • Plan for continued price/performance improvements • Multi-core has many impacts: • May require changing applications algorithms • May increase memory size per node

47. Questions? Please email: hpc@idc.com Or check out: www.idc.com/hpc www.hpcuserforum.com

48. Backup Slides

49. Industrial Use of Grids: Across All Computing