IDC Market Update

1. IDC Market Update

2. Agenda IDC Overall GDP And IT Economic Update IDC Worldwide Server Forecasts IDC HPC Market Update Current Market Dynamics HPC Forecast IDC’s View on High Growth and Low Growth Segments Summary

3. IDCOverall GDP AndIT Economic Update

4. The Downturn’s Impact On IT

5. An Economic Shock: Worldwide GDP Forecast

6. An Economic Unknown: Government Actions

7. Impact on IT

8. IT spending worldwide should come in somewhere between 5 and 6 percent. This is spending on hardware, software, and services. The US and Western Europe will come in around 5% and Japan, less than 2%. But then, as we saw in the economic picture, the emerging countries will come in much higherIT spending worldwide should come in somewhere between 5 and 6 percent. This is spending on hardware, software, and services. The US and Western Europe will come in around 5% and Japan, less than 2%. But then, as we saw in the economic picture, the emerging countries will come in much higher

9. The New IT Budgets: Recovery in 2010

10. Short Term Hot and Cold Spots

11. Essential Guidance

12. IDC WorldwideServer Forecasts

13. Computing Infrastructure Trends Matt Eastwood Group Vice President Enterprise Platforms Research

14. WW Server Forecast:This is a Market Reset

15. Worldwide Server Market, 1996-2010

16. Server Capability (and Density) Soars

17. Market Segments Continue to Shift

18. The Top 10 HPC Predictions for 2009

19. IDC HPCMarket Update

20. Top Trends in HPC The global economy is impacting all HPC segments HPC declined -3% for 2008 overall 2009 is projected to decline -5.4% A major change from the 19% yearly growth over the previous 4 years We are forecasting 3% growth for the next 5 years Growth starting in 2010 Major challenges for datacenters: Power, cooling, real estate, system management Storage and data management continue to grow in importance Software hurdles will rise to the top for most users Driven heavily by multi-core processors and hybrid systems

21. 2008 HPC Server Market Results

22. HPC Server Market Size By Competitive Segments (2008 Data)

23. Vendor HPC Market Shares In 2008:All HPC Segments MAKE LABLE BIGGERMAKE LABLE BIGGER

24. Total HPC Revenue by Processor Type Add percentage number for X86, in 2007, rev from x86 system sales took about 68 % overall HPC revAdd percentage number for X86, in 2007, rev from x86 system sales took about 68 % overall HPC rev

25. Total HPC Revenue by OS Linux contributed 72% rev in 2007. Unix 22%, Win took 5%, windows has been flat a 5-6% over the recent 5 yrsLinux contributed 72% rev in 2007. Unix 22%, Win took 5%, windows has been flat a 5-6% over the recent 5 yrs

26. Growth In HPC Clusters

27. Why is Commodity Hot? .. Price!

28. Cluster Vendor Market Shares, 2008

30. Major Forecast Assumptions Macroeconomic turmoil will slow the global economy, reducing overall IT and HPC server spending HPC server sales will show a significant decline extending through mid-to-late 2009, but not as severe as the overall server market High-end of the market will be more resilient to the general economic condition than other segments Mid-to-low end of the market will still lag the enterprise profile, but will follow it more closely than before Clusters will continue its penetration into HPC

31. Major Forecast Assumptions We expect to see different impacts in different industries Automotive and Financial sectors will hurt the most in the near term, expect rebound in 2010 Energy sector will see stronger spending in search for alternative resources Bio-life science will show flat to moderate growth Gaming/movie sector will spend at healthy rate Government, Defense and Universities will present flat to moderate growth Green IT will slowly have more impact on procurement decisions Petascale initiatives around the world will drive up sales in high-end of the market

32. New HPC Forecast on Revenue, Units, ASP, 2007 – 2013

33. Forecast Comparison on HPC Revenue, Pre & Post Crisis, 2007 – 2013

34. New HPC Revenue ($M) Base Case Forecasts, 2007 – 2013, By Competitive Segment

35. Down Side Forecasts ($M), 2007 – 2013, By Competitive Segment

36. NEW HPC Application/Industry Forecasts, 2007 - 2013

38. Color Coding Scheme

39. Supercomputers By Application/Industry Segments

40. Divisional By Application/Industry Segments

41. Departmental By Application/Industry Segments

42. Workgroup By Application/Industry Segments

43. Total Market By Application/Industry Segments

44. IDCHPC Summary

45. Major Customer Pain Points #1 Dealing With The New Economic Realities Clusters are still hard to use and manage System management & growing cluster complexity Power, cooling and floor space are major issues Third party software costs Weak interconnect performance at all levels Applications & programming — Hard to scale beyond a node RAS is a growing issue Storage and data management are becoming new bottle necks Lack of support for heterogeneous environment and accelerators Multi-core issue: hard to use(apps don’t scale well (or no apps at all) to take advantage of the processing capability), memory bandwidth limit, Multi-core issue: hard to use(apps don’t scale well (or no apps at all) to take advantage of the processing capability), memory bandwidth limit,

46. Major Customer Pain Points Software has become the #1 roadblock Better management software is needed HPC clusters are hard to setup and operate New buyers – require “ease-of-everything” Parallel software is lacking for most users Many applications will need a major redesign Multi-core will cause many issues to “hit-the-wall” Multi-core issue: hard to use(apps don’t scale well (or no apps at all) to take advantage of the processing capability), memory bandwidth limit, Multi-core issue: hard to use(apps don’t scale well (or no apps at all) to take advantage of the processing capability), memory bandwidth limit,

47. Questions?

48. Questions?

49. BackupSlides

50. The Top 10 HPC Predictions for 2009

51. 1. The HPC Market Will Dip In 2008 and 2009 But Will Remain a Bright Spot in the IT Space IDC estimates full-year 2008 HPC server revenue will be about $9.6 billion, down 4.2% from 2007. Our base case forecast shows revenue declining 5.4% in 2009, resuming modest growth in 2010, rebuilding to robust 9.6% growth and $11.7 billion revenue in 2012. HPC looks to remain one of the bright spots in the IT space.

52. 1. Fiscal Conservatism Will Affect HPC Market Segments Unequally Some automotive and financial services firms will shrink capex even in mission-critical areas, including HPC. In leading oil and gas companies, and in some entertainment and consumer product firms, budget cuts will be rare and HPC growth plans will usually be pursued, sometimes with delays. Government and academia will likely follow historical patterns by reacting less quickly and deeply to the economic downturn than the private sector does. In the U.S. and elsewhere, HPC will compete for funding with other pressing priorities.

53. 1. The Global Recession Has Other Implications The moderate revenue decline will trigger some vendor consolidation. Increased focus on cost-effectiveness will make standards-based clusters even more appealing. Products that boost the efficiency of existing HPC resources will also do well. More sites will apply simulation and analysis to existing data center designs to grow performance with minimal impact on power, cooling, and facility space. Capex-free HPC cycles delivered via service-oriented grids (and perhaps even some via cloud computing) will become more appealing to new users and for periodic, overflow work.

54. 2. HPC Storage Will Increasingly Outpace the HPC Server Market The storage market will stay closer on course in 2009 as the server market dips, enabling the storage growth rate to outpace servers by at least 5%. Some large commercial storage firms will still fail to understand the learning curve needed to sell to HPC buyers. More hardware OEMs will start offering HPC storage solutions. Not all of them will have as much value to add as they believe. Flash has major advantages but will be applied judiciously until costs drop.

55. 3. The Petaflop Club Will Gain More Members PF initiatives are under way around the globe. There will eventually be two membership levels: Systems with substantial custom engineering price tags at times exceeding $100 million Megaversions of standards-based clusters sold at a fraction of that amount 2011-12: The petascale bake-off between the creations of the DARPA HPCS program and Japan's Keisoku Project Will Japan blow the U.S. out of the water with superior real-world performance again, as the Earth Simulator did in 2002? Will these innovation-packed supercomputers lead the rest of the HPC market forward to unprecedented programmability, productivity, and performance, or will they branch off as a separate species with little relevance for the mainstream HPC market?

56. 4. HPC Supply Chain Use Will Become a Metric For Industrial Competitiveness IDC/CoC research: 97% of the firms that had adopted HPC said they could no longer compete or survive without it. Another 2008 IDC/CoC study showed that except for oil and gas, HPC isn't used much yet in supply chains. Today's affordable HPC entry-level systems, along with SMB-oriented utility computing offerings will capture more tier 2 and tier 3 industrial suppliers beginning in 2009. HPC use will start to become a metric for supply chain competitiveness, as it already is for tier 1 firms.

57. 5. Power and Cooling Will See Lots of Innovation But No Major Breakthroughs Power & cooling costs will remain a top issue for HPC sites. “Green" savings will be earmarked for the purchase of additional performance – the holy grail of HPC. There will be innovations in 2009 and more simulation of data centers for energy efficiency, but no major breakthroughs. The primary "Green" driver in HPC will be to obtain more performance within a fixed or more slowly growing green footprint. In most other IT sectors the primary driver will be to reduce costs to improve profitability.

58. 6. Competition Will Heat Up In the Alternative Processor Wars Nearly 10% of the sites IDC interviewed for our end-user, demand-side research were using alternative processors. Alternative processors have not yet made big market share gains in HPC, but neither are they insignificant. Alternative processor vendors are "messaging" in their marketing campaigns that the future of HPC belongs to them. For 2009 and the near term, x86 processors will remain in the driver's seat. Intel's Nehalem and AMD's Shanghai processors will deliver enough advances to keep them there.

59. 6. Competition Will Heat Up In the Alternative Processor Wars (continued) Innovations such as Nvidia's CUDA have substantially eased the burden of programming alternative processors, but for now this burden is still more onerous than coding within the mainstream x86 ecosystem. In 2009, users and vendors will increase their exploration of processor and system-level heterogeneity as the processor wars heat up. Will the majority of future HPC systems use a mix of processor types? Will x86 and alternative processors incorporate more and more of each other's capabilities and grow more and more alike?

60. 7. Standard Products Will Grow, But More Codes Will See Retrograde Performance A late-2008 IDC survey: one in eight HPC sites (12%) had some codes that ran more slowly on their newest HPC system than on the prior one. 50% of the sites said they expected to see retrograde performance on some codes within 12 months. The culprits: escalating core counts that exceed the codes' scalability, driven by the inability to move data in and out of each core fast enough to keep the cores busy. Most HPC ISV applications were designed to run on one core with relatively strong access to main memory. Multicore/manycore processors have dramatically changed the bytes-to-flops ratio. And energy-saving, tuned-down processor speeds reduce reduce single-threaded performance.

61. 8. The Highly Parallel Programming Challenge Will Increase Hardware parallelism from burgeoning core counts and system sizes is racing ahead of programming paradigms and the time available to programmers. Manycore processors and heterogeneity add to the programming challenge. The parallel performance "wall" will reshape the nature of HPC code design and system usage. New DARPA HPCS languages could transform highly parallel programming starting a few years from now, but some users will resist this revolutionary change.

62. 8. The Highly Parallel Programming Challenge Will Increase (continued) Solutions in 2009 will be less revolutionary. They include: Hide parallel hardware behind optimized application-specific libraries (Interactive Supercomputing, Acceleware) Optimize intra-node performance for multicore (Acumen) Abstract from distributed parallel hardware (ScaleMP, PGAS languages) Address processor heterogeneity by extending the x86 ISA within the compiler to include parallel accelerators (e.g., Convey Computer) Eventually something will need to give. HPC programmers will need more efficient programming paradigms, more innovative approaches for redesigning applications, more balanced hardware architectures, or all of the above.

63. 9. Software Licensing Costs Will Become a More Universal Chokepoint For most medium to large HPC industrial sites, application software fees already exceed the HPC server costs, often by a factor of two. For smaller HPC users the application fees can exceed the server hardware costs by four to five times. Software vendors have been hard pressed to develop pricing models that turn an adequate profit while enabling their customers to exploit the many additional CPU hours that rampant hardware parallelism has made available. In 2009, software vendors will make further progress in addressing this challenge but licensing costs will become a major issue for nearly all HPC sites that rely on commercial software.

64. 10. Ease-of-Everything Will Gain Ground At the Low End and Beyond In 2007 and 2008, HPC vendors introduced server products priced under $50,000 and were designed to meet that segment's "ease-of-everything” requirements. In 2009, the underlying complexity of HPC server systems will continue to grow and ease-of-everything solutions will become more widespread in the workgroup segment. Hardware complexity will also grow for users outside of the workgroup segment, and this will make ease-of-everything solutions more appealing at higher price points as well.

65. Essential Guidance: General 2009 will be a year of evolutionary rather than revolutionary change. Existing major challenges will remain inadequately addressed: Highly parallel programming System imbalance (the "memory wall") Power and space usage Software licensing costs Ease-of-use – dealing with the growing system complexity The global economic recession will not significantly slow progress on these challenges or on scientific and engineering work, but it will slow sales enough to cause a dip in 2009.

66. Essential Guidance: HPC User/Buyers In the difficult economy, vendors will compete more fiercely for your business. This will present opportunities to drive harder bargains that may no longer be available as the HPC market begins to recover in late 2009 and onward Users whose capex is under greater pressure in 2009 than their opex should consider sending overflow work to utility computing providers Some of these providers offer ISV applications and expertise as well as cycles External cycles work best on less time-critical and less-security sensitive jobs

67. Essential Guidance: HPC Vendors The economic downturn will make buyers even more price-sensitive and this will be more favorable for standards-based clusters. Clusters will continue to put pressure on profits and challenge vendors to find new ways to deliver added value. Industrial HPC buyers will likely complete planned R&D-driven HPC purchases over the next few months, then reduce capital spending in many industries (excluding oil/gas). IDC expects government and university HPC purchasing to enter a flat growth period, with purchasing delays possible for the first six months or so of the new U.S. Administration.

68. Essential Guidance: HPC Vendors National security and homeland defense operations will continue to develop additional requirements for HPC systems New applications areas for HPC may be developed based on database and pattern matching requirements IDC expects R&D for alternative energy sources, as well as nuclear, coal, climate modeling, and oil/gas to be strong growth segments

69. Conclusions

70. Conclusions Standards-based clusters will gain market share in the price-sensitive economy, but more HPC sites will experience retrograde performance on some codes More petaflop systems will arrive in 2009, and “ease-of-everything” solutions will proliferate at the low end and beyond HPC supply chain use will start to become a metric for industrial competitiveness Because of its mission-critical nature, HPC will exit the recession the way it entered it as a bright spot in the IT space

71. Questions?

72. Why Is Commodity Hot? .. Price!

73. From Our New End-user Study