enterprises continue to spend on hardware as they upgrade
their networks to keep pace with expanding business
spending in other areas has reduced in the current year,
enterprises have actually increased their spending on
revenues come mainly from companies with rapidly expanding
business, such as banking and financial institutions.
Although not in the top three focus areas of the IT
budget, Enterprise Hardware is a focus area for 34 percent
of the survey respondents.
87 percent of the respondents said there was an increase
in requirement. The average rate of increase in requirement
is 30 percent.
For this survey we placed all enterprise/networking
hardware in two categories: Servers and Networking Gear.
The Networking Gear segment includes hubs, switches,
routers and structured cabling. We also considered a
third category: PCs/Workstations & Peripherals (which
includes network printers), but it has been left out
of this story, since we didn't notice any appreciable
Every CIO knows that choosing enterprise servers is
no easy task. It involves decisions about the operating
system platform, the processor type (Intel or RISC),
the server applications, the number of users served
and so forth. Then there are decisions to be made about
the form factor of the serverrack mounted, blade
servers, appliance servers or the usual boxes.
In India, low-end departmental servers for file/print,
databases and messaging are common. These servers are
used by the SMEs.
Mid- and high-end servers are used mainly by banking
and financial institutions, and telecom companies. While
Windows NT/2000 servers have a strong presence in the
Indian enterprise, Unix/Linux servers are catching up.
Around 87 percent of the respondents said they use Windows
NT/2000 servers and 56 percent said they have a requirement.
50 percent respondents have Unix/Linux servers and 44
percent said they would require these.
Sun/Solaris servers are also gaining ground. About 21
percent of the respondents have these servers and 27
percent have a requirement.
At one time the demand for Netware (File/Print) servers
was strong, but these are fading out. Just 4 percent
of the respondents said they have a requirement for
NetWare servers in 2002-03.
The rest of the respondents use other flavours of Unix
(such as HP-UX), which are proprietary. Unix servers
(especially those that come with high-end variants of
Unix) are more prevalent in mission critical environments.
An industry analyst says that, over the next 2 - 3 years,
many enterprises will go in for server consolidation
to optimize and simplify the existing IT infrastructure.
CIOs are now looking at server consolidation as a means
to cut costs. Consolidation reduces TCO by reducing
administration costs, maintenance costs, cost of software
licenses/upgrades and cost of acquisition of new servers.
But consolidation also presents other benefits. By reducing
the number of servers a company can save power and floor
space. Server consolidation also reduces the points
The deployment of bandwidth-intensive applications like
ERP, SCM and data warehousing has led to increased deployment
of networking infrastructure like hubs, switches, routers
and structured cabling. The demand for hubs is on the
decline. This is balanced by the increased demand for
The price gap between hubs and entry-level switches
for 10/100 Mbps connectivity is narrowing. Since switches
offer better performance, they are likely to replace
hubs in the near future. However, there is still demand
for hubs from enterprises.
75 percent of the survey respondents said they use hubs
and 53 percent said they have a requirement.
Vendors are offering switches for different levels of
the LAN. With reference to the seven layer OSI model,
there are Layer 2 switches, Layer 3 switches and Layer
4 - 7 switches.
Performance-wise, hubs were found to be inadequate for
LANs and routers were considered to be too expensive
for use at the LAN level. So Layer 3 switches, which
cost a fraction of the price of routers and offer equivalent/better
performance, are replacing routers at the LAN level
on campus networks. Layer 2 switches have already replaced
hubs in many application areas. However routers are
pushed to the edge of the enterprise network and are
used at the WAN level.
The demand for switches is high and 63 percent of the
respondents said they have a requirement.
Depending on the required functionality, one can choose
between Managed Switches, Unmanaged Switches, Stackable
Switches and Chassis Switches.
Routers: These devices are used at the WAN level
on enterprise networks. Routers interconnect different
offices/branches. They are also used for connecting
the enterprise network to the Internet (via the service
About 60 percent of the respondents said they use routers
and 40 percent said they have a requirement. This indicates
that enterprises are increasingly extending their networks
and interconnecting offices at different locations.
Demand for routers is expected from the Banking &
Finance, IT/Telecom verticals. There will also be some
requirement from the Government as e-governance increases.
Structured Cabling: From a confusing array of various
cabling systems for different communications systems,
we now have either copper or fiber structured cabling
systems. The current standard is CAT 5E (Enhanced CAT-5
cabling), but vendors are already talking about CAT
6 and CAT 7 cabling. CAT 6 has not yet been ratified
by the EIA/TIA and CAT 7 is an ISO development.
Network consultants advise organizations with more than
100 network nodes to go in for structured cabling. We
found that 46 percent of the respondents already have
structured cabling systems and 29 percent have a requirement
This year the average amount allocated for Enterprise
Hardware has gone up from Rs 184 lakh to Rs 288 lakh.
The demand is even across all industry sectors.
Last year 52 percent of the respondents spent Rs 25
lakh on hardware. This year too, 52 percent have allocated
the same amount for hardware.
Going by average spending, hardware is one of the few
areas where spending has actually increased in the current
year. The increase in average may be due to the fact
that some more companies are spending between Rs 1 -
10 crore on hardware.
Demand for low-end and mid-range Windows servers is
almost equal across all sectors, while demand for proprietary
Unix and Solaris-based servers is high in IT & Telecom
sectors. We can also expect demand for high-end RISC/Unix
servers from the IT/Telecom, Banking & Finance,
and Insurance sectors. The SMEs will require entry-level
or mid-level (Windows NT/2000) servers. There may be
some requirement from the government too. There is also
opportunity in the Telecom sector, especially for rack
mounted and blade servers, which save on floor space
The biggest buyers for networking equipment will be
IT/Telecom companies closely followed by Banking &
Investment towards Enterprise Hardware is expected to
continue. The deployment of data-centric applications
will fuel demand for networking infrastructure like
routers and switches. Converged Networks are becoming
common and enterprises will procure hardware for voice-enabling
The deregulation of the Telecom sector will increase
demand for hardware like switches and high-end servers.
Many ISPs who have entered the International Long Distance
(ILD) and Net Telephony business will require switching
Banks and financial institutions will continue to spend
on hardware as they go about expanding their businesses.
average amount allocated for Enterprise Hardware
has increased from Rs 184 lakh to Rs 288 lakh
87 percent of the respondents said there
was an increase in hardware requirement
While Windows NT/2000 servers have a
strong presence in the Indian enterprise, Unix/Linux
servers are catching up
87 percent of the respondents said they
use Windows NT/2000 servers and 56 percent said
they have a requirement
50 percent have Unix/Linux servers and
44 percent said they have a requirement for
Unix servers in 2002-03
Sun/Solaris servers are also gaining
ground. 21 percent of the respondents have these
servers and 27 percent have a requirement
NetWare servers are fading out. Just
4 percent of the respondents said they had a
requirement for NetWare servers
60 percent of the respondents said they
use routers and 40 percent said they have a
72 percent of the respondents said they
have a requirement for PCs/workstations and
peripherals (including printers)
5 benefits CIOs seek
connectivity with regional offices
Meet core business demands
Improvement in operational efficiency
Better customer service