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Hardware Today: Gateway Server Snapshot

Tuesday Mar 23rd 2004 by Ben Freeman

It's been a little over a year since Gateway set out to be a disruptive force on the enterprise server scene. We look at whether it's been a blizzard or a squall, and discuss how the vendor's products stack up against the competition.

At first blush,the landscape of Gateway server country looks much like Dell server country. Like Dell, Gateway offers Intel Celeron-based entry-level servers that straddle the line between servers and robust desktop machines.

In addition, Gateway's current server price structure, hardware spread, and even Web site purchase options are similar to Dell's. The similarities make sense when one looks at who is in the driver's seat: Scott Weinbrandt, senior vice president of Gateway's Enterprise Systems and Professional Business Services group, left Dell for Gateway and has been charged with the task of making Gateway a disruptive force in both the SMB and enterprise space.

To its credit, Gateway has been able to squeeze a distinct server offering through the margins of an extremely competitive commodity space. IDC's fourth quarter 2003 server sales statistics shows Gateway leveraging this approach into success in the entry level market. Gateway ranked a distant fifth in domestic server units shipped (behind IBM, Dell, HP, and Sun). In domestic server sales, however, it ranked ninth, showing that it's moved more, albeit less-expensive, units than other vendors and fewer of its more recent 4-way Xeon MP based 995 series servers. Its desktop user base and retail locations, from which it claims to generate 40 percent of its SMB business, have also helped to move lower end units. This indicates that perhaps Gateway's sweet spot is slightly lower than scale-out's typical virtualization-ripe 4-way models.

"While we're slowly ramping up the 4-way system, it was more of a strategic product to enable us to sell more of the other, more commoditized products, " Weinbrandt said. "[This helped] us entertain bid opportunities that we historically could not participate in, because we were locked out without a 4-way." Gateway's most popular servers to date are the 920, 960 for towers, and the 955 and 975 for racks. The smaller servers have won out.

Compared to other vendors Hardware Today has profiled, the overall ranks of Gateway's server line are arguably slim. It appears uncomfortable with this, opting to bulk its Web offerings up via an opening menu that suggests different server lines for SMBs, large businesses, government, and education, a la Dell. But while these markets do have distinct shopping requirements, don't search the site expecting to find other server offerings hiding within. Gateway's offerings come down to a simple, and also quite logical, largely Xeon-based incrementally numbered assemblage of 1-way to 4-way servers. The following chart depicts Gateway's server and storage offerings, without regard for its own gently redundant taxonomy of them.

Gateway's Server Offerings*

Server Type
Servers
Description
Max. No. of
Processors
Processor Range
Base Price
Tower 920,
920 SCSI,
920 SB
Entry-level server for organizations with a limited IS staff Celeron 2.4 GHz or P4 3.06 GHz 1 $399,
$649,
$1,098
960X For workgroups running basic applications Xeon DP 3.06 GHz 1 to 2 $1,299
980 For workgroups running high-performance applications Xeon DP 3.06 GHz 1 to 2 $2,299
Rack 955 1U, general-purpose Xeon DP 3.2 GHz 1 to 2 $1,599
975 2U, general-purpose
Xeon DP 3.2 GHz
1 to 2
$1,799
995 4U, enterprise-level and mission-critical applications Xeon MP 3.0 GHz 1 to 4 $5,499

* All Gateway servers are certified for SUSE, Novell, and various stripes of Windows. Other platforms have limited support through Gateway's Custom Integration Services.

>> Standing Apart From the Crowd

The paucity of Gateway's year-old server offerings may be a blessing in disguise, as it gives them room to grow. You can bet Gateway will pick its battles with its road map. In a marketplace where it's not uncommon for vendors to scramble to be all things to all CIOs, this is encouraging. Gateway has held off on introducing a blade to date, planning one for "the not too far off future," and, while Weinbrandt held fast and emitted nary a specific peep on new products in advance, it seems likely Gateway will leverage its partnerships with IBM and Intel into a low-end blade it can push more confidently than Dell with its PowerEdge 1655MC.

Another area where Gateway has strategized better than Dell is in its processor strategy. Gateway's servers currently lack an Itanium-2 option, another incongruous Dell offering. This is unsurprising based on Gateway's low-end focus, but the move looks to have been a smart one, given Intel's plans to release a 32/64-extended Xeon chip around mid-year. "We don't have a date, but whenever Intel introduces that product, that really solves the short-term issue around 32/64-bit compatibility," said Weinbrandt, who conceded that an Intel 32/64-bit server looked likelier than an Opteron down the road.

But for the moment, a lean server line solves only part of the puzzle. The issue of gaining ground in a fiercely competitive market remains. "It comes down to, why Gateway?" Gordon Haff, senior analyst at Illuminata, told ServerWatch. "Enterprises already have the x86 Tier 1 vendors: Dell, HP, and IBM," he said, adding that "even Sun's now joined the fray." Outgunned by vendors like RackSaver for high performance clusters, and with a blade pending in a market beginning to blossom for blades, Haff believes enterprises will ask, "What does Gateway have to offer that is unique and compelling?"

"Quality is a significant part of our differentiation," Weinbrandt said. For quality assistance, Gateway draws on the experiences of partner Intel, which in turn has drawn on assistance from its partner, IBM. Gateway's 4-way Xeon MP 995 rack server, for example, features error correction and availability features that approximate IBM's "self healing" mainframe technology. "There really is no single point of failure in that box, other than if the motherboard completely bombs," Weinbrandt said, adding that some of these mainframe features are also present in lower-end Xeon DP servers.

Gateway's key differentiator may remain its refreshing simplicity. It has made the server purchasing process akin to that of buying a television set: easy to buy at a retail location near you, and just as easy to return. "What Gateway's trying to leverage its retail locations, which have been a debatable move because of their cost," Haff said, "but they do give Gateway a physical presence that a competitor like Dell lacks." Gateway servers are also relatively OS agnostic. They are certified for SUSE, Windows, and Novell but come in many other flavors under limited support through a custom integration department.

Gateway also claims to be the only vendor offering a 90-day money back guarantee. "No other server vendor has ever done that," Weinbrandt said. "Even in my years at Dell, we would never have taken that approach," he added, "because we were worried about having somebody return a product."

And Gateway's servers may be easier to repair than TVs. Through a partnership with IBM Global Services, it's leveraged Big Blue's worldwide support model to offer four-hour and two-hour response times through its call center in Atlanta. "This is very different than our competition," Weinbrandt said, "most of their call center activity is migrated somewhere overseas."

The support technicians manning Gateway's enterprise support phones are all Tier Three and server certified, "so you're not going to go through that desktop certified individual, who's asking, Is it turned on? Is it plugged in? Is the OS running?," Weinbrandt said.

Last year, Gateway introduced a storage line priced to compete with Dell's. Its aim: to be "disruptive" in the enterprise storage market. Gateway currently offers tape backup devices to direct attached storage as well as a single Windows Storage Server 2003 based NAS offering. Although these options can't rival those from NetApp, EMC, or Snap, they do give retail and dedicated Gateway customers in-vendor storage options for their servers.

The following chart offers an at-a-glance view of Gateway's storage offerings.

Gateway's Storage Offerings

Storage Type
Server
Description
Storage Range
Base Price
Tape Backup Solutions 810 2U DAT72 autoloader, supports up to two 6-cartridge autoloaders Up to 8 DAT72 36/72 GB DAT cartridges $2,199
820
2U LTO autoloader Up to 8 LTO-1 Ultrium 100/200GB Tape Cartridges $5,499
Direct attached storage 840 8 to 12 drive 2U hot swappable Serial ATA RAID 2 TB to 3 TB $3,999
850 SCSI Storage Enclosure 219 GB to 432 GB $2,999
Network-attached storage 860 Celeron (480 GB) or Pentium (1 TB) based NAS server running Windows Storage Server 2003 with hot-swappable Serial ATA 480 GB or 1 TB $3,699

With its enterprise division off to a great start, Gateway is positioning itself to steal some market share from Dell and other commodity vendors -- assuming it can continue its strategy of playing to its strengths while also finding ways to push the envelope of what a small server vendor can do in a big-player-dominated market.

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