Blades are the fastest-growing segment in the overall server market, which last year had worldwide sales of more than US $40 billion, according to Gartner Inc., in Stamford, Conn. Like other new technologies, blades still face a number of technical challenges, but more and more companies are already switching to them. The organizations that are buying blades today are mostly large ones, such as telecommunications and pharmaceutical companies, Internet service providers, and financial institutions.

Buyers are adopting blades for various reasons. Some, like Veritas, were seeking to concentrate their sprawling server farms and had ended up with computer rooms that were overcrowded and power hungry; blades in this case allowed them to free some rack space without losing computing power.

Others are going with blades because they are easily replaceable when failures occur. Some brokerage firms, for example, are using blades to run their equity trading systems, which need to be highly reliable so brokers can see up-to-the-second stock prices. These firms have so many servers that failures are routine events, and units need to be "hot-swappable": you pop the failed unit out of the enclosure and when you put in a new one, it goes on line automatically.

Yet other buyers have found that blades, despite costing an average of 10 percent more than comparably configured conventional units, bring technical benefits that outweigh their higher prices. Because of the comparative ease with which they can be upgraded or reconfigured, blades have lower administrative and service costs, which can make up for the higher initial outlay in as few as two or three years. Blade makers claim that as few as two significant changes to a server—upgrades or reconfigurations, say—over the typical three- to five-year life of a machine can justify the purchase of blades. In fact, the majority of blades' customers have hundreds, if not thousands, of servers to which they make changes about once a year.

Blades, which first hit the market in 2001, still account for less than 3 percent of the total server market, or about $1 billion. But their adoption is accelerating [see chart, Blades Take Off]. Gartner's estimate of 340 000 units sold in 2004 is about double the total for the year before. Gartner expects that number to triple over the next four years, at which point one in every eight servers in operation in the world is likely to be a blade.

Today, heavyweights such as Dell, Fujitsu, Hewlett-Packard, IBM, and Sun are the biggest suppliers of blades; together these five companies supply more than 90 percent of the blade market [see chart, "Slicing the Pie"]. But the small group of newer and smaller vendors that share the rest of the pie—notably Egenera Inc., in Marlboro, Mass., and Verari Systems Inc. (formerly RackSaver), in San Diego—are finding that clever innovation can make up for what they lack in size and clout.