At its recent financial analyst day, AMD indicated that it intended to differentiate itself by creating products that were advantaged in niche markets, with specific mention, among other segments, of servers, and to generally shake up the trench warfare that has had it on the losing side of its lifelong battle with Intel (my interpretation, not AMD management’s words). Today, at least for the server side of the business AMD made a move that can potentially offer it visibility and differentiation by acquiring innovative server startup SeaMicro.
SeaMicro has attracted our attention since its appearance (blog post 1, blog post 2), with its innovative architecture that dramatically reduces power and improves density by sharing components like I/O adapters, disks, and even BIOS over a proprietary fabric. The irony here is that SeaMicro came to market with a tight alignment with Intel, who at one point even introduced a special dual-core packaging of its Atom CPU to allow SeaMicro to improve its density and power efficiency. Most recently SeaMicro and Intel announced a new model that featured Xeon CPUs to address the more mainstream segments that were not for SeaMicro’s original Atom-based offering.
On Monday, February 13, HP announced its next turn of the great wheel for servers with the announcement of its Gen8 family of servers. Interestingly, since the announcement was ahead of Intel’s official announcement of the supporting E5 server CPUs, HP had absolutely nothing to say about the CPUs or performance of these systems. But even if the CPU information had been available, it would have been a sideshow to the main thrust of the Gen8 launch — improving the overall TCO (particularly Opex) of servers by making them more automated, more manageable, and easier to remediate when there is a problem, along with enhancements to storage, data center infrastructure management (DCIM) capabilities, and a fundamental change in the way that services and support are delivered.
With a little more granularity, the major components of the Gen8 server technology announcement included:
Onboard Automation – A suite of capabilities and tools that provide improved agentless local intelligence to allow quicker and lower labor cost provisioning, including faster boot cycles, “one click” firmware updates of single or multiple systems, intelligent and greatly improved boot-time diagnostics, and run-time diagnostics. This is apparently implemented by more powerful onboard management controllers and pre-provisioning a lot of software on built-in flash memory, which is used by the onboard controller. HP claims that the combination of these tools can increase operator productivity by up to 65%. One of the eye-catching features is an iPhone app that will scan a code printed on the server and go back through the Insight Management Environment stack and trigger the appropriate script to provision the server.[i]Possibly a bit of a gimmick, but a cool-looking one.
The Dell brand is one of the most recognizable in technology. It was born a hardware company in 1984 and deservedly rocketed to fame, but it has always been about the hardware. In 2009, its big Perot Systems acquisition marked the first real departure from this hardware heritage. While it made numerous software acquisitions, including some good ones like Scalent, Boomi, and KACE, it remains a marginal player in software. That is about to change.
In an interview with the Economic Times in India, Dell announced yesterday that it was readying a war chest of about US$1 billion for IT services related acquisitions in India. Here is why I think this announcement is important for Dell:
First, Dell needs to continue strengthen its global delivery network and industrialization capabilities. Dell bolstered its IT services market position with the Perot Systems acquisition in 2009. Since then, the company has made clear its development ambitions in India from an offshore perspective — including during the first analyst event they hosted in India in September 2011. The company lags far behind the services behemoths, including IBM, which has more than 100,000 staff in India working for international clients.
The India domestic market is also becoming a top priority for all major tech vendors. Forrester expects this market to grow by 20% in 2012 in local currency (see my recent report on the future of IT services in India). Japanese companies like NTT Data have launched aggressive inorganic growth strategies to tap this booming market (Dimension Data in 2010 — which was at the time part of the top 10 IT services firms in India via its Datacraft subsidiary — and more recently Netmagic Solutions). And Forrester expects more Japanese investments in the coming few months.
While IBM, HP, and Wipro Infotech are leading the IT services market in India, Dell is still marginal in terms of system integration and managed services activities. So it’s high time that Dell strengthens its presence in India.