Hardware Today — Midyear Server Report Card

by Ben Freeman

With the first half of 2004 now a memory, Hardware Today revisits server market predictions made in December 2003. We look at the latest trends in processor and storage options, as well as what's going on with server blades and grid computing.

Last December, Hardware Today issued 10 predictions for 2004,. With the first half of the year in the dust and the lazy days of summer upon us, we'll briefly close the grill, trade in our "Kiss the Cook" apron for a lab coat, and evaluate the current state of the server market.

Industry Leapfrog

With factory revenue up for four straight quarters, the direction of the race to be the number one server vendor continues to move upward. But the leader of the pack is again in flux. First quarter IDC numbers (second quarter stats have not been released as of press time) show IBM's 29.7 percent market share hopping past HP's 26.9 percent. HP, however, took the lead for server shipments. Dell and Sun tied for market share with a Dell leap and a Sun descent. Further complicating the four-frog race were the different areas in which the vendors excel: IBM generally sells larger servers; HP bolstered its low end; Dell's exclusive low-end focus has paid off; and Sun continues to tow the line in a flat Unix market.

In a report issued in June, IDC predicted Windows and Linux will account for more than 50 percent of operating systems market revenue by 2008, up from 37 percent in 2003. Yet organizational shakeups may prove a lily pad in Sun's swamp. Sageza Group Research Director Charles King said, "2004 may be the year Sun starts acting like a grown-up company." Jonathan Schwartz is quite likable, he explains, and an AMD partnership bolsters Sun's x86 strategy, not to mention that "expanding its relationship with Fujitsu for UltraSPARC development offers Sun benefits similar to those HP hoped to gain from its Itanium partnership with Intel."

When I'm 64?

The Beatles tune may ring true for server vendors hoping enterprises will remain faithful to new 64-bit offerings. Intel's mid-February Nocona announcement acknowledged Itanium 2's slow start and implicitly validated AMD's 32/64 Opteron strategy. "That was a huge admission of strategic error by Intel, and is likely why they've been downplaying Nocona's 64-bit capabilities as simply one of multiple enhancements," King said.

In the first quarter of 2004, "new x86-64 servers, which support both 32-bit-and 64-bit applications, showed 35.1 percent sequential growth in unit shipments," IDC research found, and this was well before the actual unveiling of Nocona on June 28 and the first server shipment.

In addition, HP recently admitted its own rocky Itanium-2 relationship by adding Opteron servers and future blades to its family.

"I can't find people developing code for Itanium," Robert Frances Group Principal Analyst Ed Broderick told Hardware Today in a recent interview, "but Opteron is certainly giving Intel fits."

Indirect competition between Itanium and Opteron hints at the impending melding of the high end and the low end of the 64-bit market. King sees IBM marrying its iSeries and pSeries lines on a common POWER5 platform as an important step here: "IBM will be able to drive down prices significantly," which will boost customer loyalty and bring POWER solutions to a lower market entry point. "That's particularly important considering Intel's plans to offer price parity on Xeon and Itanium by 2007," he adds.

Blade Crusade

As predicted, blades continue their mission to penetrate the enterprise. IDC believes blades will continue to grow in popularity and will account for 29 percent of all server unit shipments — $9 billion in sales — by 2008.

Vendors bolstered their blade war chests throughout the first half of the year. In June, HP trumpeted the sale of its 100,000th blade. It also launched double-density ProLiant BL30p blades, which sheath 96 Xeon blades in a 42U chassis. IBM added the BladeCenter T, a telco-specialized chassis, and the HS40 4-way Xeon blades in January. It also shipped JS20 Power 970 blades in June. Sun unleashed its Fire blades in February, adding AMD Athlon and SPARC blades. Dell kept quiet with its trusty PIII PowerEdge 1655MC blades before recently announcing Nocona blades will hit the market in the fourth quarter.

Meanwhile, RLX and Egenera continue their quest to translate first-to-market status back into market share. RLX defends its turf from infidels atop its newly fortified Control Tower , which automates on-demand tasks. And, as reported in the cheekily indispensible Register, Egenera's June 24 IPO filing gave clues as to why its so popular in financial markets: Its three biggest investors are key customers. The S-1 form bluntly notes, "Historically, we have been substantially dependent on sales we have made to affiliates of Credit Suisse First Boston LLC, Goldman, Sachs & Co. and J.P. Morgan Securities Inc., the three lead managing underwriters of this offering."

>> Storage and Virtualization

The Virtual On-demand Grid

As predicted, virtualization is found virtually everywhere in 2004. Speedy Infiniband reduces latency, enabling scale-out machines to be transformed easily into scale-up clusters. EMC's VMware has consistently innovated to keep ahead of its fast-emerging market.

Grid is also becoming more of a reality. Maria DeGiglio, an analyst at the Robert Francis Group, attributes this in part to POWER5. "POWER5's Virtualization Engine will enable customers to be truly on demand," she said. In addition, POWER5's and Sun's new 64-bit UltraSPARC IV both bring Chip-Multi-Threading to such tasks.

Vendors are beginning to discuss heterogeneous grids compatible with products from other vendors. IBM, Broderick says, has the deep pockets to drive the initiative, but others are committed as well. "I'm not going to judge or test their veracity, but it's hard as heck to do," he warns.

Another factor in grid maturation is whether enterprises' corporate culture is grid ready. As an example, Broderick cited the plight of two IT executives from different departments of the same company. "We may be peer executives, but I don't want you running over to steal cycles on my machine tonight when I might need them," he said, "I'm not paid or motivated to help you, to be blunt, until our boss, the CEO, says, 'Okay, go grid it.'"

And until then? "We'll go drink and play golf together, but get the hell out of my computer department, thank you very much."

For enterprises not ready to reach deep into their pockets to create a grid pool, one option proving popular is IBM's Deep Computing Capacity On-Demand program, where they can rent supercomputing power on an as-needed basis.

Cold Storage?

Broderick sees one "startling bellwether" in 2004's storage climate: the long-awaited arrival of IBM's Storage Tank in the form of the IBM TotalStorage SANFS, which provides a unified file system from a SAN for Windows, Linux and Unix servers. Though it technically occurred in mid-November 2003, the full effect of the Storage Tank is now being felt. Proponents call it a powerful file-sharing solution, while detractors yell "proprietary dinosaur!"

The lines in the big picture for storage are blurring as NAS devices and SANs become more indistinguishable and interwoven, with NAS devices functioning as Storage-Tank-esque gateways to SANS.

Fibre Channel has carved a niche for itself as the storage data transfer alternative of choice, with organizations like NetApp maintaining a leadership role in iSCSI development. Infiniband storage looms as a near-future possibility. Mostly though, Broderick believes storage technology has followed Moore's Law, becoming faster and less-expensive.


With half the year remaining, these developments lead mainly to more questions. Will Sun's shakeups be productive or initiate supernovas? Will HP dump Itanium-2 in response to cold customer shoulders? Will Dell continue to eat market share with its scrappy low-end focus? Will IBM continue to be an analyst favorite in every category?

Only time will tell for sure.

This article was originally published on Monday Jul 12th 2004
Mobile Site | Full Site