Hardware Today — Dell Server Snapshot

Monday Aug 16th 2004 by Ben Freeman
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We once thought Dell might be too low-end for its own good as well as fuzzy on its blade strategy, but the company continues to add value to its entry-level servers while it sharpens its blade focus. However, we do wonder if it will ever give AMD a chance.

When we last pointed our server snapshot lens at Dell, the picture revealed a vendor aiming squarely at commodity success. In that January article, we noted that all of Dell's offerings were 2-way or 4-way servers and that the Texas-based system vendor was focusing on lowering list prices far below the competition. We raised concerns that some of Dell's servers were so low end, they hardly seemed like servers at all. We were also troubled by the company's lack of a clear blade strategy.

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As we revisit Dell, our first concern has proved to be unfounded, given Dell's continued market success and slight restructuring of its low-end. Its entry-level servers pack more processing powerful and feature a better architecture, while retaining low price points.

Regarding our other concern, Dell recently announced a blade model based on Intel's new Nocona processor. With those earler fears laid to rest, we'll take a look at how Dell continues to follow Intel's roadmap all the way to the bank. We will also speculate on processor choices as we ponder the question, will Dell ever give AMD a second look?

New Prez, Strong Numbers and Nocona

It has been a lucrative six months for Dell. Last month, Kevin Rollins took on the role of CEO and president. Just last week it released its Q2 earnings, which showed substantial revenue and unit sales increases. In fact, IDC numbers for Q1 2004 showed Dell in a statistical tie with Sun for third place in worldwide server market revenue on gains in units shipped, among other positive factors. The company will look to keep this momentum with a flurry of new product releases.

To kick off the month of August, Dell announced its 2-way eighth-generation Xeon Nocona Extended Memory 64 Technology (EM64T)-based servers. Each eighth-generation system will feature 3.6 GHz Xeon, an 800 MHz front side bus, a maximum 8 GB DDR-2 RAM and PCI-Express buses.

"Two-processor PowerEdge servers are the fundamental base of our product line," Darrel Ward, Dell's senior manager for server product management, said. The 2-way 1U PowerEdge 1850 rack and the 2U PowerEdge 2850 rackable tower will be the first EM64T-based systems out the door on Sept. 9. with prices starting at $1,799 and $1,899, respectively.

In October, Dell is expected to ship more expandable rackable towers. The 5U PowerEdge 2800 will feature seven I/O slots and house up to ten hot-plug internal SCSI drives for 1.4 TB internal storage. The entry-level PowerEdge 1800 features six I/O slots and will allow up to six hot-plug internal SCSI drives.

Other Recent Additions

In June, Dell also quietly added the PowerEdge 7250, its heavy-hitting 4-way Itanium-2 rack server aimed at the High Performance Computing (HPC) space. In a busy February, it rounded out its entry-level offerings, added 700 tower and 750 rack P4-based servers, while — sensibly — retiring its lowest-end servers.

The following chart is an overview of Dell's server offerings. New additions are noted in bold; newly retired servers are italicized.

Dell's PowerEdge Servers, At a Glance
 
Blade Servers1
Target Deployment Lightweight file, print, and e-mail serving for one to 10 users SMB and departmental enterprise needs, also DB serving for one to 100 users Departmental enterprise needs, larger needs via HPC and high-availability clusters General use and Beowulf HPC clusters
Processor Types Pentium 4, Celeron, Xeon Xeon, Xeon EM64T
Pentium 4, Xeon, Xeon EM64T, Itanium-2 Pentium 3
Processor Range 1 to 2 1 to 4 1 to 4 1 to 2
Operating Systems Win200X, NetWare, Linux Win200X/NT, NetWare, Linux Win200X, NetWare, Linux Win2000, Linux
Servers 400SC,
600SC,
1600SC
700,
18005
2600,
28006
28504
4600,
6600
650,
750,
1750,
18504
2650,
3250,
6650
7250
1655 MC
Price2 $249 to $549 $549 to $3,699 $799 to $12,499 From $1,1993

1Dell considers its Blade offering a part of its Rack Dense Performance Servers line. We broke it out for clarification purposes. Its new Xeon EM64T Nocona blade is due out in Q4.
2Minimum configuration, after rebates. Prices in bold indicate new lows, indicative of Dell's killer price point.
3Price does not include blade enclosure.
4These newly announced next-generation Xeon Extended Memory 64 Technology (EM64T) servers
should ship 9/9/2004.
5These newly announced next-generation Xeon EM64T Newly servers are due to ship in October, with OS support to come in Q1 2005.
6Newly announced rackable tower server with next-generation Xeon EM64T support will
ship in October.

>> Continued on Page 2: What's the Difference?

What's the Difference?

One of the challenges facing Dell is finding ways to differentiate its Intel refreshes from the competition. Each server vendor's offering, Gartner research vice president John Enck joked, is so similar that each company "could've just changed PowerPoint presentations and delivered it."

Enck said there is one huge area of differentiation: management software. Dell's latest optional DRAC (Dell Remote Access Card) and free IPMI 1.5-based remote management software now feature Active Directory integration, continuous video, and virtual CD/Floppy capabilities as part of what Enck calls a "parity game," among the leading vendors who continue to leapfrog one another.

Dell's Ward said he sees the company's level of standardization and cross-platform commonality as differentiators. Common hardware to makes it easier to apply the same build to multiple eighth-generation PowerEdge servers, Ward noted.

With Dell's list prices constantly dropping, is pricing another differentiator? Yes and no. "For your average Joe, Mom and Pop SMB, Dell tends to be more price-attractive," Enck said. For big-purchase enterprise negotiations, however, not so much. "Once they get into heavy negotiations, Dell hits a percentage point in the mid-20s and they won't discount any further." IBM and HP, he said, will "drive discounts lower," and try to "make it up in storage or service."

Place your AMD Bets

While Dell has put its money on Intel-based servers, AMD's Opteron may be giving the company reason to hedge its bets. Gartner's Enck said he sees the EM64T as only enhancing AMD's appeal by validating the dual 32/64-bit architectural approach in the long run and providing a transparently common x86 platform.

So will Dell bite eventually? "I have a standing bet with Dell that they're going to [add AMD servers] by the end of the year," Enck said. He cites a stronger-than-ever Dell-Intel partnership factoring against such a move, but if HP or IBM win a few "really big [Opteron] deals," Dell will "adopt it in a heartbeat."

Enck said he imagines a Dell product manager with a "big old spreadsheet," in which "there's a calculation that says how much market share [loss] can they tolerate. How many server units can they lose before it's cost effective for them?" Dell denies all — sort of: "As of today, we have no plans to offer AMD servers," Ward said. "That's not to say it never will happen. As soon as it makes business sense for us, we would do it."

Itanium Reasoning

Dell's Intel partnership and its HPC focus may explain why the 4-way PowerEdge 7250 Itanium server made sense on that "big old spreadsheet." So far, Ward said, Dell has seen demand for the PowerEdge 7250 "exactly where we expected to see demand for it: in SQL, SAP enterprise and Oracle deployments."

But Itanium-2's limited appeal may be in danger. "There continues to be some traction loss in the market for Itanium because of this Opteron/EM64T technology," Enck said. Some database customers previously on a course to adopt Itanium are now waiting to see whether Opteron and Nocona form an indisputable migration path, he said. However, Dell's Ward sees Itanium-2 as useful, at least in the meantime, citing the fiscal quarters to go before Microsoft gets its operating system and database in sync with EM64T.

Blade Banter

Dell has said outright only that its two-processor Nocona-based PowerEdge blade will be released later this year in Q4. But Ward and another Dell spokesperson seemed willing to speculate that such a blade might look a lot like other eighth-generation Dell servers, particularly the new PowerEdge 1850 1U system. The fundamental objective, Ward notes, "was to have it very common with our other platforms architecturally," driving common Open Manage software and build usage. Dell is shooting for a 1.5 to two times denser form factor for its new blade than that of the comparable 1U PowerEdge 1850 rack server. Dell plans to price the new blade 20 percent lower than its non-blade sister, the PowerEdge 1850. Doing the math on the PowerEdge 1850's $1,619 list price, you can expect a $1,299 per blade price tag.

Dell Remains Focused and Formidable
Dell's seems unbeatable of late, particularly in the SMB market. Enterprise buyers, however, may want to pay close attention to Dell's pricing during negotations. If you are seeking an adrenaline rush or scale-up servers, look elsewhere or consider an Itanium-2 offering.

It's been a while since Dell released a blade and, for it to gain traction in that space, this one will need to be good. In general, however, as long as Dell sticks to its standard architecture with pragmatic consistency — while dodging any Intel lemons — it should enjoy continued success.

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