SAP’s new CEO Leo Apotheker says the software giant will focus on its core software business, even as its rivals expand beyond their traditional boundaries.

The latest trend in the tech industry–at least among its biggest companies–is to offer products and services that used to be provided by partners. H-P (HPQ) expanded into consulting last year when it bought EDS, Cisco announced in March that it was moving into the server business, in April SAP’s (SAP) software rival Oracle agreed to buy hardware maker Sun Microsystems (JAVA), and in June, Intel (INTC), which makes chips, agreed to buy a software company.

SAP has no such ambition, says Apotheker. Whereas Cisco (CSCO), Oracle (ORCL) et al. say that they can reduce complexity for customers by developing all-in-one products, SAP plans to keep making software and work with partners to achieve the same goal. “People want to reduce complexity, but they don’t want it all to come from one company,” he says.

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“Like the physical universe, the digital universe is expanding. In fact, exploding,” says John Gantz, a researcher for IDC.

For the last three years, Mr. Gantz has been commissioned by storage provider EMC (EMC) to count the number of bits created each year. And each year he reports that IDC previously underestimated the explosion of information.

This is good for EMC, but it’s probably not so good for the CIOs of the world. They’re the ones who have to find room in their shrunken budgets to buy the disk arrays to store all this stuff that’s being created by employees, customers and their devices. IDC says budgets for servers and storage are shrinking by 6 percent this year.

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There has been speculation for months now that Dell (DELL) at some point will make a big acquisition. Most of the thinking has been about diversification moves. But Bernstein Research analyst Toni Sacconaghi proposes an idea that would boost Dell’s stake in the PC business: consider buying Acer.

In a research note today, Sacconaghi asserts that the PC sector is ripe for consolidation. He notes that the top 5 PC vendors accounted for 56 percent of industry units in 2008, and that the top 10 accounted for nearly 70 percent. Compare that, he suggests, with the x86 server market, where the top 5 players control more than 80 percent of the market, or the Unix server market, where the top 3 have more than 90 percent. It’s even lower than the high-def TV market, where the top 5 have 60 percent share, and the top 10 about 80 percent.

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SAP (SAP) and Teradata (TDC) plan to announce Monday a joint effort to make the German company’s software work better with Teradata’s database systems, the latest example of tech companies combining hardware and software.

A growing number of vendors have begun offering servers that come bundled with particular programs, styling the combinations as appliances that are easier to install and manage than components sold separately. Oracle (ORCL) in October announced a joint effort with H-P (HPQ) to offer a “data warehouse” machine that was designed to better search through corporate information better than standalone hardware and software from the two companies.

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There’s a hot formula for hardware start-ups these days: Take standard components that are declining steadily in price, and offer proprietary chips and software that make them work much better.

That’s the path being pursued by Virident Systems, a Silicon Valley company that plans to offer its own server systems as well as sell technology to much larger server makers.

The company’s chief executive is Raj Parekh, who held executive titles at Sun Microsystems (JAVA) in the 1990s and also was a co-founder of Silicon Graphics (SGIC). He traces Virident’s existence to the fact that the design of most servers stacking up in computer rooms evolved years before the Internet. They often have massive number-crunching power, Parekh says, but aren’t particularly good at the main thing they are purchased to do–-answer Web queries.

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Seems the more the Street thinks about Cisco Systems’s (CSCO) announcement Monday that it will sell servers, the less the Street is inclined to be enthusiastic. As I noted Monday, Cisco is expected to lose current revenue from partners Hewlett-Packard (HPQ) and IBM (IBM) as it comes into deep competition with both. And the effort Cisco will need to make to actually be successful in selling a server against both vendors seems somewhat formidable–however enthusiastic Cisco is about its server, dubbed the “Universal Computing System,” or UCS.

JP Morgan’s Ehud Gelblum sounds the most skeptical of the lot. His colleague Mark Moskowitz, who covers HP and IBM, today put out a note saying that it’s going to be pretty tough for Cisco to put together the necessary software and services to match the top vendors of servers. Gelblum agrees, but he’s more interested in what seems to be a rather skimpy return even if Cisco does succeed.

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Worldwide server sales rose 12.2 percent, year over year, to 2.3 million units, in the second quarter, declares research firm Gartner (IT) in a note today, while revenue was up 5.7 percent for a total of $13.8 billion. The main driver was the replacement of x86 servers, a trend that began in the first quarter, notes Gartner, but the expansion of data centers backing Web sites was also an important factor, as was growth in emerging markets.

IBM (IBM) held onto the top revenue spot, with 31.2 percent of revenue, up 11.5 percent from last year’s 29.6 percent. HP’s (HPQ) share of the dollars, yen and shekels fell to 27.6 percent from 28.4 percent on 3 percent revenue growth.

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Recent rumors of Intel employees signing up for Facebook accounts en masse might not have been totally unfounded: Facebook has chosen to use Intel’s Xeon 5400 processor-based servers to deal with its hardware and software demands. Additionally, the two companies have signed an agreement so that Intel can continue to assess how Facebook can stay stable and improve performance.

Facebook will have “thousands” of Xeon servers, a release said.

It’s not an earth-shattering announcement by any means, but Intel’s pretty psyched. “Intel is excited to engage with Facebook as they are a dynamic force in the evolution of the Internet,” Kirk Skaugen, vice president and general manager of Intel’s Server Platforms Group, said in Thursday’s release.

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