At a recent news conference in New York, Dell computer announced its readiness to ship Intel-based thin servers with the same direct sales derring-do that marked its successful assault on the PC market.
At that very moment in Dells Round Rock, Texas, headquarters, however, a server made by a competitor was churning out the thousands of orders from Dells $50-million-per-day Web site. That back-end server is not even built from the bread-and-butter Intel processors on which Dell depends for its core business. Rather, it is a Himalaya machine, made by Dells nemesis, Compaq Computer, which acquired the Himalaya line with its purchase of Tandem Computers.
The paradox of Dell, a leading Internet company, depending on Compaq back-office processing equipment at the same time it is entering the fast-growing server market illustrates how the order of server suppliers is being shaken up. And it raises new questions about which company, if any, will ultimately dominate the increasingly diverse market for the machines that power e-commerce.
High-end boxes from Hewlett-Packard, IBM, Silicon Graphics Inc., Sun Microsystems and Unisys, most often powered by Unix, still represent the bulk of the iron-horse servers that can be counted on to run 24/7 while hosting thousands of concurrent users.
But the sudden demand for both types of servers — consolidated and thin — is pushing server vendors out of their safe niches onto uncertain ground.
It promises to be a grueling race.
Workhorse vs. Flexibility
Big companies and Internet Service Providers (ISPs) alike want the reliable consolidated servers that come with guarantees of no downtime for a companys operations, even when a piece of equipment fails.
IBM recently gave its venerable System 390 mainframe a new look as the Z900, with improved Internet capabilities. HP in December launched its Superdome server with up to 64 processors. And for two years Sun has been making gains on the competition with its Starfire Enterprise 10000, which can be powered by as many as 64 processors.
At some point, commodity servers may challenge these established lines, but for now, their redundancies and fail-safe features make these muscle-bound veterans the engines of the Internet for large enterprise.
At the same time, however, Internet start-ups and network-based hosting services, such as application service providers (ASPs) or ISPs, are looking for small, light machines that can be added quickly and easily to accommodate growth spurts.
And with PC sales slowing, Compaq and Dell have entered the so-called thin-server market with a vengeance — but so have HP, IBM and Sun, not to mention a host of newcomers, including Advantech Technologies; Cobalt Networks, recently acquired by Sun; Network Appliance; RLX Technologies, a new company formed last week by a group of former Compaq executives; and VA Linux Systems. Intel may make its own foray into the thin-server space with its acquisition last August of Ziatech, a maker of next-generation ultracompact servers.
Thin servers are, as their name suggests, small, light, flexible boxes based on off-the-shelf Intel processors. Their “thin-ness” is measured in increments of 1.75-inch heights denoted by the letter “u,” for “unit”. There are 42 units in the vertical computer racks that are quickly replacing the tower servers that used to make up the bulk of low-end sales. That means users can stack up to 42 1u servers or up to 21 2u servers in a standard rack. By buying these thin clients only as needed, at prices ranging from $2,600 to $5,000, users can cheaply add server power as needed to meet customer traffic.
“The fastest-growing part of the server market is the 1u and 2u space,” said Michael Lambert, senior vice president at Dells Enterprise Systems Group. That segment represented only 94,000 units in 1999. By 2004, it is expected to constitute more than half of servers sold — some 701,000, according to figures from International Data Corp.
Internet businesses, ASPs and other network-based services like thin servers because they make it easy to add computer power and they take up little floor space when stacked in a rack. Most service providers establish their computing resources at a colocation service provider, where they are charged by how much space they occupy. In return, they get broad bandwidth access to the Internet.
The ability of companies such as Compaq and Dell to capture customers online and mass-produce thin servers to individual orders makes them potentially formidable competitors to the established server makers. “Enterprises and dot-coms alike are demanding new solutions from their server vendors,” said Mark Melenovsky, research supervisor for Intel architecture servers at IDC. Through 2000, demand for thin servers doubled between the first and fourth quarters, from 15 percent to 30 percent, he said.
Compaq Sets Pace
Compaq Sets Pace
Vendors and analysts said Sun is the manufacturer to catch in the high-end market, while Compaq is setting the pace on thin servers.
Compaqs ProLiant DL360 was a recognized hit in June because it incorporated two Pentium processors in an attractive 1u package. Compaq officials said they sold 24,000 units in the first quarter following the products introduction, but they wouldnt comment on more recent sales.
ASP NetLedger, which purchases Linux-based thin servers from VA Linux, said Compaq hit the nail on the head. “IBM was first to market, but Compaq has produced the perfect box for Internet service providers,” said David Durkee, chief information officer at NetLedger.
Compaq spokesmen said its no accident they came up with the right mix of performance and manageability in the ProLiant DL360, DL380 and DL580 models. With ISPs sliding hundreds of thin servers at a time into racks, Compaqs discussions with users showed manageability was as much an issue as processing power.
As the racks of thin servers build up at a service provider, technicians have to push a cart down an aisle carrying a monitor, keyboard and mouse to install a new server or reboot an existing one. A common error, said Compaqs server marketing manager, Paul Miller, is for a technician working on the front of a thin server to go around to the back side and unplug the wrong cable in a 42-unit stack. For that reason, Miller said, Compaq offers connections for keyboard, monitor and mouse on both front and back, as well as a blue LED that can be lit remotely to indicate which server is being worked on.
Unlike other thin server vendors, Compaq has built a disk array controller into its server motherboard, sparing the customer from using one of two precious PCI card slots in the server for that function. The disk array controller lets one small computer system interconnect (SCSI, pronounced SKUZ-ee) drive back up another. This redundancy can prevent a shutdown in case of a single drive failure.
SCSI drives in a Compaq thin server are also hot-swappable. A failed drive can be unplugged and a new one inserted without taking the server down, a key feature for Web sites that have to remain in continuous operation, Miller said. Dell matched the feature in its 1550, Dell spokesmen said.
In addition, Compaq is offering — as a $500 option — a lights-out management board that plugs into a PCI slot in its server. With the board installed, a system administrator can link to the server and audit its operations from anywhere, including a wireless device, as if he were standing in front of it with keyboard, monitor and mouse attached, Miller said. The board includes its own battery emergency power. If the server stops running, a system administrator “can still look at what happened before the server went completely dead,” he said.
In February, Dell came out with its two-processor, PowerEdge 2450, a 2u rack-mount server, about 3.5 inches high. On Dec. 5, it announced the 1550, which offers similar processing power in a 1u configuration. The 1550 features two Pentium III 933-megahertz or 1-gigahertz processors, three low-profile SCSI hard drives and 4 gigabytes of RAM at a price of $2,599.
“That price is likely to send a cold spell through Houston,” said Kevin Libert, director of marketing at Dells Enterprise Systems Group, in reference to rival Compaqs headquarters.
The pricing undercuts all of Dells major competitors, including Compaq, IBM and Sun. The price for the Compaq ProLiant DL 360 ranges from $4,009 for a system with dual 550-MHz Pentium III processors to $5,035 for a system with dual 933-MHz Pentium III processors. There is as yet no 1-GHz model. Sun sells its Netra t1 Model 100 with a 360-MHz UltraSparc II processor for $4,995.
But aggressive pricing is necessary because Dell is in fact just catching up with the technology of the widely acknowledged market leaders — Compaq and IBM — each of which engineered powerful two-processor servers into a 1u box six months before Dell managed the feat.
IBM was actually early to market with one- and two-processor models of the Netfinity 4000R in September 1999. The two-processor version was a 2u box. Netfinity has now been renamed the X Series.
Dell, IBM and Sun offer their own remote management features, but they tend to omit one or more of Compaqs combined set. Dell, for example, offers the OpenManage Server Assistant 6.0 to help customers set up their servers in about 20 minutes. Its OpenManage IT Assistant monitors processor status, internal temperatures and fans, and alerts a system administrator to problems. OpenManage tools can be used from remote locations on the network through a Web interface, according to Dells Libert.
But in the event of system failure, the remote administrator cant peer into the Dell server for an explanation of what happened the way the Compaqs lights-out management board does, Compaqs Miller said.
The difference, said Pauline Nist, vice president at the Tandem business unit, is Compaqs research and development engineers experience in the server field. They now include experienced designers from Tandem and Digital Equipment Corp. who are pushing manageability features down from its Tandem and Digital Alpha servers into the Compaq thin server lineup.
Tandems high-speed server interconnect, which allowed an instantaneous transfer of operations from one server to another, is now being pushed into Compaqs ProLiant server clusters and thin-server racks, Nist said. A more basic example, she said, was how the forest of thin-server cables, often five per server in a 42-server rack, is adroitly directed by Compaqs cable pulleys and holders, which bundle each servers set out the back end of the unit.
IBM and Dell representatives said their thin-server designs practice cable management as well.
New Competition for Sun
New Competition for Sun
Compaq, with its acquisition of Tandem and its update of the Tandem Himalaya line, is also a new contender in the consolidated server space. Consolidated servers are multiprocessor machines that can do the jobs of several other servers. The IBM Z900 and Sun Starfire 10000, for example, are machines that require one administrative interface, but can be partitioned into dozens or hundreds of virtual machines, each representing a Web business or >> other customer. Consolidated servers require fewer management resources than many small machines. They can make use of a centralized pool of storage, as opposed to each machine having separate storage. And they contain many redundant features that keep them up and running 24/7.
After buying Tandem and Digital, Compaq needs to capitalize on its expertise in servers — both large Himalaya and the former Digitals Alpha architecture servers — to make the acquisitions pay off.
“So far, there have been three big winners in Internet computing — Cisco Systems in network equipment, Oracle in databases and Sun in servers,” said Joyce Becknell, an analyst at Aberdeen Group.
IDCs figures now indicate that Sun owns 56 percent of the high-end Unix server market and 36 percent of the total high-end server market, with its recent gains appearing to come at the expense of traditional rivals HP and IBM.
“Sun has been growing revenues more quickly than anyone else. Intel architecture vendors have to compete with Sun,” IDCs Melenovsky said.
If Sun has emerged as a winner with its Solaris operating system, a flavor of Unix, and UltraSparc chips, will Compaq and Dell succeed in undercutting its position with commodity Intel-based servers? Both have taken away workstation market share from Sun with cheap and powerful desktop machines based on Windows NT and 2000. In addition, Dell is now shipping 8 percent to 10 percent of its servers with Linux installed, Dells Lambert said.
Its too soon to say whether Compaq and Dell can make headway against Suns entrenched position, analysts said, but doubts about Suns next-generation chip, UltraSparc III, make the tenure of its lead over other vendors appear shaky.
“We believe there are yield issues regarding the UltraSparc III, which could mean we are not going to get the midrange product from Sun in early summer that we had thought,” Merrill Lynch & Co. analyst Tom Kraemer said last month. At the same time, Prudential Securities downgraded its rating on Sun stock from “buy” to “accumulate.”
Sun denied it has experienced any setbacks in producing the UltraSparc III chips. Sun doesnt manufacture its own chips. It is relying on Texas Instruments to produce its design for the UltraSparc III, said Max Baron, editor of the Microprocessor Report. Chris Kruell, marketing manager for Suns Systems Group, said his company will implement UltraSparc III into the rest of its server line as planned over the next three to six months. Nevertheless, Suns stock, which has traded at a high of $64.65 per share over the last 12 months, has been changing hands recently in the $28 to $32 range.
Sun is actually playing hard at both ends of the server market, with its production of UltraSparc thin servers plus its Dec. 7 acquisition of low-end, server appliance maker Cobalt. Server appliances are often thin servers preconfigured with software to do particular tasks, such as Web serving or database serving. At the same time, Sun produces high-end Starfire Enterprise 10000s with up to 64 UltraSparc central processing units (CPUs). Sun sold 500 Starfires at up to $1 million each over an eight-month period, from June 1998 to February 1999.
Now the vitality of the Sun product line rests on its ability to deliver on the UltraSparc III promises that it made Sept. 27 in New York, three years after the original UltraSparc III announcement. The company has just started to make deliveries of Sun Blade 1000 workstations and low-end Sun Fire 280R servers with UltraSparc III chips running at 600 MHz, 750 MHz and 900 MHz.
Meanwhile, Compaq, Dell and IBM are rapidly raising the price/performance ante, with HP eagerly waiting in the wings for the 64-bit Itanium chip, which it codesigned with Intel.
“The UltraSparc III design has taken a lot more time than anticipated,” Baron conceded, but Itanium has also suffered production delays and does not yet appear to be available in quantity. The new breed of thin servers is particularly dependent on the price/performance of their respective CPUs. Sun is as strong as it is in server competition based on its aging UltraSparc II because Intels Itaniums schedule also slipped, he said.
UltraSparc I and II have been primary engines of the Internet so far, and “UltraSparc III takes Sun to the second generation of dot-com architectures,” said John Shoemaker, executive vice president at Suns Systems Products Group, on Sept. 27.
Intel compared a 600-MHz UltraSparc III with a 660-MHz Itanium in executing security algorithms commonly used over the Internet for virtual private networks, Secure Sockets Layer in transactions and public key infrastructure for trusted documents, and claimed Itanium was about seven times faster, according to figures published on its Web site.
Intel introduced its fourth-generation Pentium chips at 1.4 GHz and 1.5 GHz, and Itaniums first-generation successors are expected to quickly achieve those speeds.
“The potential is there for Itanium to take over more of the market,” Baron said. “The lead Sun is enjoying right now is because Intel left it some breathing room.” Intels upcoming Itanium 64-bit chips are due in quantity later this year, he said.
IBMs Power chips are being mass-produced reliably with copper instead of aluminum circuits, which allows cooler and smaller circuits, Baron said. IBM has Power4 chips in pilot production with cooler-running copper circuits and insulating layers in the chip to reduce electrical interference. The result is an ability to pack up to 170 million transistors on a Power4 chip, compared with UltraSparcs 27 million, and is expected to appear in an IBM Regatta server by the end of this year.
Will the Is Have
Will the Is Have It?
Although chip manufacturers regularly best each other on performance, depending on when their new generations appear, its possible IBM and Intel will emerge with a competitive advantage. Sun will still be implementing UltraSparc III on its server line as IBM readies Power4, said Jim McGaughan, spokesman at IBM Unix systems.
To Baron, the issue is real, but hes not yet ready to give the contest to Intel and IBM. Sun has designed features into UltraSparc that differ from Intels Pentium or upcoming Itanium, or IBMs Power designs.
“The main innovations that Sun has brought to the world are not its competitiveness on megahertz [clock speed],” Baron said. Sun has designed parallel instruction processing and a high-speed bus into UltraSparc III that lets the chip handle multiple tasks at a time. In addition, it has a memory controller built in that allows each UltraSparc chip to control up to 8 megabytes of system memory. On a multiprocessor system, this memory controller gives each chip the equivalent of “a very large cache,” or memory pool, reserved for the data and instructions likely to be used next by the chip, Baron said.
Such a move accelerates the operation of each chip in a multiprocessor system by preventing collisions between processors seeking the same data that often cause other systems to spin their wheels, he said.
If the memory controller proves a boon to multiprocessor server design, Sun may be able to bulk up its Enterprise 10000 servers beyond 64 processors to hundreds of chips and get added performance with few penalties.
“The real merit of this device will be apparent in multiprocessor servers,” Baron said, “but Sun still has to prove it.”
Sun has aligned itself well with the Internet, Aberdeens Becknell said. But both Compaq and IBM are rapidly pushing big server technology downward through their midrange and thin-server product lines. New chip technology will impact which company can produce the most powerful high-end servers, and the outcome of the race remains anyones guess, she said.