Dell has spent the past decade steadily gaining ground by hugging the low-end of the server market. Is it now ready to cross the commodity chasm?
For the past decade, Dell has gained ground steadily by hugging the low-end of the server market, and doing it better and less expensively than any other vendor. According to the latest server penetration numbers from IDC, that strategy has taken Dell to the No. 4 spot in the worldwide server space based on revenue, the No. 2 spot in x86 server sales worldwide and the top spot in North America, and the No. 3 in Linux server revenue.
But the commodity approach can take you only so far, and it may no longer be enough if Dell is to continue to gain ground. The company's standing in x86 servers is under attack by IBM, and Big Blue tied with Dell for revenue in this category for fourth-quarter 2004.
"There seems to be a shift in the market with enterprises spending more on solutions and giving less weight to cost," says IDC analyst John Humphreys. "Cost is still important, but perhaps not as important as it once was. Dell tends to push cost, but the solution message needs to emphasized more."
Dell's recent offerings indicate it is heeding this warning. The vendor has two 4-way products, a better server management platform in the Dell OpenManage 4.3 release, a redesigned blade architecture, and a 1U model specifically designed for supercomputing clusters. The company has also consolidated its component inventory to simplify system administration and maintenance.
"Mixing our various server products is easy, as they are all based on common BIOS, motherboards, firmware, drivers, and the same system management software," says Antonio Julio, server product manager at Dell.
As shown in the grid below, Dell subdivides its PowerEdge server offerings into three main lines: Value Towers, Performance Towers, and Rack Dense Performance servers. Blades are considered a sub-section of the latter category. Dell categorizes all three lines as eighth-generation (8G) systems. At the core of its 8G offerings is a 3.6 GHz Xeon EM64T processor, an 800 MHz front side bus, DDR-2 400 ECC memory, and PCI-Express buses.
Dell's PowerEdge Servers, At a Glance
||Rack Dense Performance Servers
||Lightweight file, print, and e-mail serving for up to 10 users
||SMB and enterprise departments as well as database serving for up to to 100 users
||Enterprise departments and HPC high-availability clusters
||General use and Beowulf HPC clusters
||Pentium 4, Celeron, Xeon EM64T
||Celeron, Xeon, Xeon EM64T
||Celeron, Pentium 4, Xeon, Xeon EM64T, Itanium-2
||1 to 2
||1 to 4
||1 to 4
||1 to 2
||Windows 200x, Red Hat Linux
||Windows 200x, NetWare, Red Hat Linux, SUSE Linux
||Windows 200x, NetWare, Red Hat Linux, SUSE Linux
||Windows 200x, Red Hat Linux, SUSE Linux
||$349 to $549
||$549 to $3,999
||$549 to $12,499
Dell considers its Blade offering part of its Rack Dense Performance Servers line. We broke it out for clarification purposes.
Price does not include blade enclosure.
As would be expected, most changes to the Value Line are incremental. The PowerEdge SC1420, for example, has a Xeon processor, while the lower-end SC420 contains more competitively priced Celeron and Pentium-4-based systems.
>> Pin-Pointing PowerEdge
Dell has invested far more effort into its best-selling performance tower line. It added an entry-level single-processor server for file-print (the 800), an entry-level rackable server (1800), and the 2800 Performance Tower. The 2800 uses a Xeon EM64T processor, has an 800 MHz front-side bus, and is available with 1 MB or 2 MB of cache. Two additional Dell tower servers are built on EM64T processors: the SC1425, intended for high performance computing (HPC) clustering, and the 2850, a rack dense server.
In the blade arena, Dell withdrew the PowerEdge 1655 MC blade last year but has come back strongly with the 1855. The chassis holds up to 10 blades, and it has redundant cooling, connectivity, and power. In addition, the 1855 has a keyboard, video monitor, and mouse (KVM) switch to manage all 10 blades. Blades can be single- or dual-processor using EM64T processors. Up to 12 GB of addressable memory is available for each blade, with up to 600 GB per blade in internal storage using SCSI hard drives.
IDC's Humphreys, remains curious how Dell will fare in its second foray into this arena. He views blades as more of a solution sell than a box sell because of their manageability, cooling, and chassis components.
Dell's Julio, explains that the company has taken heed of this important difference and this time around has a much better handle on the blade marketplace.
"Our blades can be clustered together, or run individually using different operating systems," says Julio. "In addition, the chassis has been engineered to support next-generation blades."
In the past couple of weeks, Dell has also introduced a 4-way performance tower (the 6800) and a rack-dense counterpart (the 6850). Both use the latest Xeon 64-bit processors (Potomac and Cranford), have DDR2-400 ECC memory, PCI Express I/O, and are available in two different configurations an 8 MB Level 3 cache or a 2 MB cache version with a faster processor. The former is recommended for the larger data blocks typical in database environments, and the latter is more suited to processor-centric applications.
"The user-side benefit of these new 4-way systems is the ability to run larger apps, larger databases, more terminal server sessions, more Web pages, and so forth," says Gartner analyst John Enck. "The advent of 64-bit addressing really helps here because it addresses memory inefficiencies that have historically existed in x86 technology."
These 64-bit 4-way boxes represent Dell's latest push into a market where it has been relatively weak in the past. To date, Dell has done best in 1- and 2-way sales but doesn't offer anything with more than four processors. It hopes to change things with its latest blades and 4-way products.
"Dell is very strong in 2-way servers, where it does a great job in the SMB, Linux cluster, and cost-sensitive markets," says Humphreys. "But in the blade and 4-way space, Dell has had trouble penetrating the enterprise market."
I Want My AMD
Despite the periodic rumor swirl, AMD has not yet been invited to the Dell server party. With all of the other major vendors now offering Opteron wares, does Dell have any plans to add support for Opteron in the near future?
"We have no plans at all to add Opteron chips to our servers," said Julio. "We follow Intel announcements closely, making server upgrades rapidly available on the latest and greatest processors. Adding support for Opteron would only increase our costs."
With Opteron earning kudos in the marketplace and winning out against Xeon under various comparisons, is this a smart move for Dell? HP's 4-way Opteron systems are selling well, for example, and Dell has nothing to counter in this space. Time will tell if Dell can compete effectively in this sphere.
"Hypertransport technology gives good price/performance in 4-way, and HP has ramped up its sales in this area significantly," says Humphreys. "It's good that Dell is moving with Xeon extensions, but so is the rest of the market."
Dual Core Horizons
Dual core, of course, is riding a wave of expectation in the server world. And this technology could play in Dell's favor. Being strongest in the 2-way arena, and intent on gaining traction into the lucrative 4-way space, Dell could well gain ground once dual-core processors arrive on the scene.
"With dual core looming on the horizon, this offers Dell the opportunity to provide two sockets with four cores," says Humphreys. "That could signal a migration from the traditional 4-way customers to the 2-way space."
Although the company keeps its future roadmap close to its chest, watch for a major dual-core push by Dell in the near term. "We will be releasing a 1P product in the third quarter that supports the latest dual-core technology from Intel," notes Julio.