PC and Server Powe er Management. Issues, Published 1Q Pete Fosterr. Presidentt

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1 EXECUTIVE SUMMARY: PC and Server Powe er Management Software Business Drivers, Market Issues,, Technology Issues, Competitive Landsc cape, and Market Forecasts NOTE: This document is a free excerpt of a larger research report. If you are interested in purchasing the full report, please contact Pike Research at sales@pikeresearch.com Published 1Q Pike Research LLC. 0 Pete Fosterr Industry Analystt Clint Wheelockk Presidentt

2 Section 1 EXECUTIVE SUMMARY 1.1 The Scale of the Problem Emissions from personal computers and peripherals amounted to 407 MTCO 2 e in 2007 and are projected to double by Since China and India are developing rapidly, there will be significant demand for IT equipment of all sorts in those regions. The use of PCs in the home, in particular, is likely to approach thee levels already seen in the developed world. In business, the focus is on power usage rather than emissions. U.S.. servers and data centers consumed about 61 billion kilowatt-hours (kwh) off electricity in 2006 at a cost of $4.5 billion. This represented around 1.5% of f total U.S. electricity consumption, similar to the power used by 5.8 million U..S. households. The growth of Internet use, the role of information technology at the heart of business, and increasing business-related legislation are all contributing to the rise in IT power usage Wasted Power The problem is that while much of the IT mayy be needed, a significant proportion of the energy it consumes is wasted and generatess greenhousee gas (GHG) emissions for no good purpose. All too often, PCs are not switched off at night or over weekends let alone when not being used during the day. Using power management settingss could save one of these PCs 746 kwh of electricity in just 1 year, which translates to almost $77. Yet, in 2010, only around 22% of users employ power r management settings effectively. The problem is more fundamental for servers. When a server is idle, it continues to consume more than half the power it does when fully utilized. Even though serverss may have power management settings, the capability is seldom used because of concerns about availability and response times. Withh the added complication of virtual server sprawl, it is increasingly difficult to know what servers are doing and where power is being consumed. The power management software market has grown out of the commercial need to addresss these failures. The market encompasses a variety of products with a range of functionality, from user-friendly tools to adjust PC power usage when machines are idle, to complex virtualization management software that can, for example, dynamically switch virtual servers between physical devices to increase utilization. The range of capabilities is broad and there is some overlap with built-in product functionality at the bottom end of the PC market as well as conflict with other, data center based solutions in the server sector. The commercial products and solutions considered in this report are those aimed at more easily and effectively minimizing power use and maximizing efficiency of PCs and servers. 1.2 Market Drivers The current economic climate has undoubtedly helped sustain the power management software market, but it has not provided any specific boost. Companies are still concerned about investing, however good the business case appears to be. While return on investment (ROI) can be impressive, companies need a lot of convincing before parting with their money. 1

3 The longer-term driver is energy prices. With power demand increasing and supply under pressuree around the world, electricity prices are set to continue their inexorable climb. However, it is not just the direct cost that needs to be considered. Legislation is likely to add to power prices through carbon taxes, such as the recently introduced CRC Energy Efficiency Scheme in the United Kingdom. The U.K. cap-and-trade scheme is a first, but legislation will be introduced around the world in the coming years. What sweetens the pill, particularly in the United States and Canada, are the rebates available from utility companies for implementing power management software. Thanks to such rebates, software can effectively be obtained for freee and ongoingg cost savings can be provided. These rebates have given a significantt boost to the market in the United States, particularly for education and government organizations. For some customers, it is not just about the money. Corporate responsibility and stakeholder pressuree customers, shareholders, and employees can push companies toward power management. Much depends on where the impetus comes from. The drive toward power management needs support from the top and, ideally, a champion to push it through. A champion may be needed. One of the problems with installing power management solutions is that while the IT department will be responsible, and take the blame for any problems, it is rarely the one that sees the benefit. Often the IT department has no idea of the power consumption of the ICT equipment for which it is responsible. It does not see the bills, let alone pay them. Consequently, there is a reluctance to implement a dedicated power management product. IT departmentss can find a lot of other priorities (real and imaginary) before power management is implemented. 1.3 PC Market Dynamics The most significant area of competition in the coming years will be between those companies selling dedicated PC power management solutions, such as 1E and Verdiem, and those that provide the functionality as part of a broader r PC management suite/desktop management solution (DMS), such as BigFix. The differences between the two relate to functionality and cost. Products that are part of a lifecyclee solution are more focused on the implementation of central management and tend to have less functionality than dedicated solutions. Yet, a lifecycle solution wins out on cost. If a desktop management capability is already in place, the incremental cost for powerr management can be a fraction of the cost of a dedicated solution. If a desktop management solution is not implemented, the savings from power management can makee a powerful business case for its purchase. One area of market focus for virtually all vendors is the public sector in general and the education market in particular. This is a sector that is both keen to save money and more aware of green issues sometimes under directives to save emissions. Most vendors provide discounts (often very significant) to government organizations, which are, in turn, more likely to look for the rebates from power companies to subsidize the initial outlay. Outside of the public sector, the main markets are those where there are significant numbers of PCs, such as banking, which also tends to be an early technology adopter. Large manufacturers and utilities/ /energy companies tend to have more pressing concerns around saving power and emissions than IT. Most products in the market at the moment are intended to be delivered in-house. Software is installed on corporate servers,, usually with agent software on client machines. However, some vendors have started to offer managed/saas services via the 2

4 web. For example, U.K.-based Verismic offerss three versions of its software: on-premise, a managed services version and a hosted solution providedd via its parent company Sparxent. Hosted solutions tend to have less functionality, but they also promise instant savings. Thus, these solutions couldd add another competitivee front, particularly around price. 1.4 Serverr Market Dynamics Server products tend to be approached moree cautiously in terms of power management becausee of the reluctance of dataa center managers to allow software to turn servers off. Much of the focus for server power management software has been on making the most effectivee use of the servers available, consolidating where possible and decommissioning devices not needed. Virtualization has had a dramatic impact, but does not necessarily optimize server power use, as evidenced by the increasing problem of server sprawl. Another management layer is required and there are products that cann manage this virtual and physical server environment to maximize energy efficiency. Not surprisingly, VMware is a major player with vsphere. However, it faces competition from Oracle and CA (among others) through their recent acquisitions of Virtual Iron and Cassatt, respectively. Note, though, that there are other software approaches. These solutions either take a closer look at what the server is doing, such as 1E s NightWatchman Server, or take a broader approach to server power management, such as Power Assure ss software. The fact that servers are the primary IT infrastructure in dataa centers also clouds the issue. There is a wide range of hardware-based andd proprietary products to monitor data center power, as well as software aimed at IT and facilities power management. Two important factors should be consideredd in the development of management software market: the server power 1.5 The acceptance that it can be safe to allow software to turn off servers according to pre-set policy rules, including a safety buffer of server resources. The role of server power management within the overall data center environment. There is a need for integrated power management solutions across the data center, which is one aim of the recently launched Open Data Center Alliance, a group of influential IT users. Server power management software will need to integratee with other solutions and may well be absorbed into broader data center power management offerings in the future. Competitive Landscape The PC power management software market is still young and highly fragmented. This situation is likely to continue for a year orr two becausee the barriers to entry are low new vendors continue to emerge and product differentiation. there is a limited capacity for clear The main market competition will be between dedicated products and the functionality incorporated in PC management solutions. Since the PC management products are effectively much cheaper to implement, they will create price competition on top of the significant volume and public sector discounts already available. 3

5 Some vendors believe that their dedicated PC power management solution has a limited lifespan and are already planning to wrap the functionality into a broader PC management capability. Others are looking to expand capabilities horizontally to cover additional devices. To this end, several vendors have already made moves into the network device space through alliances with Cisco. In addition, some have considered, or are still considering, mobile devices such as ipads and printers, as well as connection with smart meters and smart sockets. By comparison, the server power management market has yet to develop a clear identity. The number of companies specifically addressing server power management is limited, with a much greater number focused on the monitoring and management of broader data center infrastructure. There will be significant developments in thiss market in the future as products develop, alliances are formed, and solutions are integrated. The fact that recent startups are prepared to enter the market is a sign of the anticipated opportunities. In the longer term, however, the market is expected to be defined by alliances between major players from the software and hardware sides covering both IT and building power monitoring and management. 1.6 Market Opportunity Pike Research forecasts that the PC power management software market will grow from a value of $47 million in 2009 to $353 million in 2015 at a compound annual growth rate (CAGR) of over 40% %. While dedicated solutions constituted the largest proportion of market revenue in 2009, lifecycle managementt products will represent almost two-thirds of market value by The majority of revenue is currently in North America two-thirds period. Yet, the European market will of the total and this will continue to be the largest market for the forecast grow significantly more strongly, as will Asia Pacific, but from a much lower base. Since deals are already being closed in China, Asia Pacific could well overtake other regions in the long term. Overall, the market growth forecast in this report for PC power management products would translate to emissions savings of 46.7 million tons of CO 2 in 2015, equivalent to planting 9.6 million trees or removing 7.8 millionn cars from the road. For the server market, we forecast that revenue will expand from $60 million in 2009 to $430 million in 2015 at a CAGR of almost 40% %. Note, though, that growth will depend on evolving market dynamics. 4

6 Section 8 TABLE OF CONTENTS Section Executivee Summary The Scale of the Problem Wasted Power Market Drivers PC Market Dynamics Server Market Dynamics Competitive Landscape Market Opportunity... 4 Section Market Issues The Size of the Problem PC Power Use and Emissions Server Power Use and Emissions PC Power Consumption and Waste PC/ /Laptop/Monitor Power Consumption Wasted PC Power Server Power Consumption and Waste Server Power Consumption Server Efficiency Market Drivers and Inhibitors Market Drivers Economic Climate Energy Prices Legislation and the Cost of Emissions Rebates Corporate and Industry Pressures Plans, Champions, and Employees Market Inhibitors Freee Solutions Responsibility for Energy and Emissions IT Priorities and Concerns Organization and Behavior Market Issues and Developments Target Markets Corporate vs. SME Industry Focus Dedicated PC Solution vs. Lifecyclee Management On-Premise vs. Hosted Solutions PC Product Evolution Server Product Development Costs and Payback PC Power Management License Costs ROI/Payback Section Technology Issues Green Procurement Product Development

7 3.1.2 Green Certification Energy Star Electronic Product Environmental Assessment Tool (EPEAT) Climate Savers Computing Initiative (CSCI) PC Power Management Technology Issues PC Functionality Putting PCs to Sleep Waking Computers Reporting Operating System Functionality Alternative Approaches to PC Power Saving Server Power Management Technology Issues Hardware Issues Data Center Implications Section Key Industry Players Competitive Landscape PC Power Management Market Vendors Server Power Management Market Vendors Vendor Profiles E Absolute Software Adaptiva BigFix (an IBM company) Dell Kace Emco Software Enviprot Event Zero Faronics Modus Interactive New Boundary Technologies Power Assure Verdiem Verismic Viridity Software VMware Section Market Forecasts PC Forecast Assumptions PC Market by Product Type PC Market by Regionn PC Market by Industry PC Emissions Savings Server Power Management Market Section Company Directory Section Acronym and Abbreviation List Section Table of Contents Section Table of Charts and Figures Section

8 Scope of Study Sources and Methodology Notes

9 Chart 5.1 Chart 5.2 Chart 5.3 Chart 5.4 Section 9 TABLE OF CHARTS AND FIGURES PC Revenue by Product Type,, World Markets: PC License vs. Maintenancee Revenue Share, World Markets: PC Revenue Share by Region, World Markets: 2009 and PC Revenue Share by Industry, World Markets: 2009 and Figure 2.1 Greenhouse Gas Emissions Footprint by ICT Sector, World Markets: 2001, 2007, and Figure 2.3 Average Power Management Adoption Rates: Figure 2.4 Average Retail Price of Electricity to Ultimate Customers, U.S. Markets: Figure 2.5 North American Utility Power Management Incentives Schemes Figure 3.1 Power Use Cost Savings from Energy Star V5 PC Purchase Table 4.1 1E SWOT Analysis... Table 4.2 Absolute Software SWOT Analysis Table 4.3 Adaptiva SWOT Analysis... Table 4.4 BigFix SWOT Analysiss... Table 4.5 Dell Kace SWOT Analysis... Table 4.6 Emco Software SWOT Analysis... Table 4.7 Enviprot SWOT Analysis... Table 4.9 Event ZeroSWOT Analysis... Table 4.8 Faronics SWOT Analysis... Table 4.10 Modus Interactive SWOT Analysis Table 4.11 New Boundary Technologies SWOT Analysis... Table 4.12 Power Assure SWOT Analysis... Table 4.13 Verdiem SWOT Analysis... Table 4.15 Verismic SWOT Analysis... Table Viridity SWOT Analysis... Table 4.16 VMware SWOT Analysis... Table 5.1 PC Revenue by Product Type,, World Markets: Table 5.2 Table 5.3 Table 5.4 Table PC Revenue by Region, World Markets: PC Revenue by Industry, World Markets: PC Installed Base and Emissions Saved, World Markets: Server Market Revenue, World Markets:

10 Section 10 SCOPE OF STUDY This report examines the global PC and serverr power management software markets. Pike Research highlights market drivers and inhibitors and discusses the issues and trends that are shaping the sector now and those that will have an impact in the future. In addition, the report includes an analysis of the competitive landscape and a profile and SWOT analysis of each of the 16 power management software vendors interviewed as part of the research process. Pike Research also discusses the market opportunity for PC power management software, as well as market revenue for 2009 and forecasts through to The forecasts are segmented by: Product type Dedicated software or an element of a broader desktop lifecycle management offering Geography North America, Europe, Asia Pacific, Latin America, and Middle East/Africa Industry sector Public sector, financial services, retail/wholesale, manufacturing, services, and energy/utility telecommunications, transport, In terms of the server market, Pike Research provides dataa for the global market through to 2015 and compares these figures with forecasts for the overall data center monitoring and management market. SOURCES AND METHODOLOGY Pike Research s industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Pike Research s analysis is primary research gained from phone and in-person interviews with industry leaders, including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community. Additional analysis includes secondary research conducted by Pike Research s analysts and the firm s staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report. These primary and secondary research sources, combinedd with the analyst s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Pike Research s reports. Great care is taken in making sure that all analysis is well supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients. Pike Research is an independent market research firm whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. The firm is not beholden to any special interests and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets. 64

11 N NOTES CAGR refers to compound average annual growth rate, usingg the formula: CAGR = (End Year Value Start Year Value) (1/steps) 1. CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well. Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unlesss otherwise noted. All values are expressed in year 2011 U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding. 65

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