We have been repeatedly reminded that the requirements of hyper-scale cloud properties are different from those of the mainstream enterprise, but I am now beginning to suspect that the top strata of the traditional enterprise may be leaning in the same direction. This suspicion has been triggered by the combination of a recent day in NY visiting I&O groups in a handful of very large companies and a number of unrelated client interactions.
The pattern that I see developing is one of “haves” versus “have nots” in terms of their ability to execute on their technology vision with internal resources. The “haves” are the traditional large sophisticated corporations, with a high concentration in financial services. They have sophisticated IT groups, are capable fo writing extremely complex systems management and operations software, and typically own and manage 10,000 servers or more. The have nots are the ones with more modest skills and abilities, who may own 1000s of servers, but tend to be less advanced than the core FSI companies in terms of their ability to integrate and optimize their infrastructure.
The divergence in requirements comes from what they expect and want from their primary system vendors. The have nots are companies who understand their limitations and are looking for help form their vendors in the form of converged infrastructures, new virtualization management tools, and deeper integration of management software to automate operational tasks, These are people who buy HP c-Class, Cisco UCS, for example, and then add vendor-supplied and ISV management and automation tools on top of them in an attempt to control complexity and costs. They are willing to accept deeper vendor lock-in in exchange for the benefits of the advanced capabilities.
I recently had an opportunity to spend some time with SUSE management, including President and General Manager Nils Brauckmann, and came away with what I think is a reasonably clear picture of The Attachmate Group’s (TAG) intentions and of SUSE’s overall condition these days. Overall, impressions were positive, with some key takeaways:
TAG has clarified its intentions regarding SUSE. TAG has organized its computer holdings as four independent business units, Novell, NetIQ, Attachmate and SUSE, each one with its own independent sales, development, marketing, etc. resources. The advantages and disadvantages of this approach are pretty straightforward, with the lack of opportunity to share resources aiming the business units for R&D and marketing/sales being balanced off by crystal clear accountability and the attendant focus it brings. SUSE management agrees that it has undercommunicated in the past, and says that now that the corporate structure has been nailed down it will be very aggressive in communicating its new structure and goals.
SUSE’s market presence has shifted to a more balanced posture. Over the last several years SUSE has shifted to a somewhat less European-centric focus, with 50% of revenues coming from North America, less than 50% from EMEA, and claims to be the No. 1 Linux vendor in China, where it has expanded its development staffing. SUSE claims to have gained market share overall, laying claim to approximately 30% of WW Linux market share by revenue.
Focus on enterprise and cloud. Given its modest revenues of under $200 million, SUSE realizes that it cannot be all things to all people, and states that it will be focusing heavily on enterprise business servers and cloud technology, with less emphasis on desktops and projects that do not have strong financial returns, such as its investment in Mono, which it has partnered with Xamarin to continue development,.
Over the past months server vendors have been announcing benchmark results for systems incorporating Intel’s high-end x86 CPU, the E7, with HP trumping all existing benchmarks with their recently announced numbers (although, as noted in x86 Servers Hit The High Notes, the results are clustered within a few percent each other). HP recently announced new performance numbers for their ProLiant DL980, their high-end 8-socket x86 server using the newest Intel E7 processors. With up to 10 cores, these new processors can bring up to 80 cores to bear on large problems such as database, ERP and other enterprise applications.
The performance results on the SAP SD 2-Tier benchmark, for example, at 25160 SD users, show a performance improvement of 35% over the previous high-water mark of 18635. The results seem to scale almost exactly with the product of core count x clock speed, indicating that both the system hardware and the supporting OS, in this case Windows Server 2008, are not at their scalability limits. This gives us confidence that subsequent spins of the CPU will in turn yield further performance increases before hitting system of OS limitations. Results from other benchmarks show similar patterns as well.
Key takeaways for I&O professionals include:
Expect to see at least 25% to 35% throughput improvements in many workloads with systems based on the latest the high-performance PCUs from Intel. In situations where data center space and cooling resources are constrained this can be a significant boost for a same-footprint upgrade of a high-end system.
For Unix to Linux migrations, target platform scalability continues become less of an issue.
Not to be left out of the announcement fever that has gripped vendors recently, Cisco today announced several updates to their UCS product line aimed at easing potential system bottlenecks by improving the whole I/O chain between the network and the servers, and improving management, including:
Improved Fabric Interconnect (FI) – The FI is the top of the UCS hardware hierarchy, a thinly disguised Nexus 5xxx series switch that connects the UCS hierarchy to the enterprise network and runs the UCS Manager (UCSM) software. Previously the highest end FI had 40 ports, each of which had to be specifically configured as Ethernet, FCoE, or FC. The new FI, the model 6248UP has 48 ports, each one of which can be flexibly assigned as up toa 10G port for any of the supported protocols. In addition to modestly raising the bandwidth, the 6248UP brings increased flexibility and a claimed 40% reduction in latency.
New Fabric Extender (FEX) – The FEXC connects the individual UCS chassis with the FI. With the new 2208 FEX, Cisco doubles the bandwidth between the chassis and the FI.
VIC1280 Virtual Interface Card (VIC) – At the bottom of the management hierarchy the new VIC1280 quadruples the bandwidth to each individual server to a total of 80 GB. The 80 GB can be presented as up to 8 10 GB physical NICs or teamed into a pair fo 40 Gb NICS, with up to 256 virtual devices (vNIC, vHBA, etc presented to the software running on the servers.
While NVIDIA and to a lesser extent AMD (via its ATI branded product line) have effectively monopolized the rapidly growing and hyperbole-generating market for GPGPUs, highly parallel application accelerators, Intel has teased the industry for several years, starting with its 80-core Polaris Research Processor demonstration in 2008. Intel’s strategy was pretty transparent – it had nothing in this space, and needed to serve notice that it was actively pursuing it without showing its hand prematurely. This situation of deliberate ambiguity came to an end last month when Intel finally disclosed more details on its line of Many Independent Core (MIC) accelerators.
Intel’s approach to attached parallel processing is radically different than its competitors and appears to make excellent use of its core IP assets – fabrication and expertise and the x86 instruction set. While competing products from NVIDIA and AMD are based on graphics processing architectures, employing 100s of parallel non-x86 cores, Intel’s products will feature a smaller (32 – 64 in the disclosed products) number of simplified x86 cores on the theory that developers will be able to harvest large portions of code that already runs on 4 – 10 core x86 CPUs and easily port them to these new parallel engines.
On June 15, HP announced that it had filed suit against Oracle, saying in a statement:
“HP is seeking the court’s assistance to compel Oracle to:
Reverse its decision to discontinue all software development on the Itanium platform
Reaffirm its commitment to offer its product suite on HP platforms, including Itanium;
Immediately reset the Itanium core processor licensing factor consistent with the model prior to December 1, 2010 for RISC/EPIC systems
HP also seeks:
Injunctive relief, including an order prohibiting Oracle from making false and misleading statements regarding the Itanium microprocessor or HP’s Itanium-based servers and remedying the harm caused by Oracle’s conduct.
Damages and fees and other standard remedies available in cases of this nature.”
HP this week really stirred up the Converged Infrastructure world by introducing three new solution offerings, one an incremental evolution of an existing offering and the other two representing new options which will put increased pressure on competitors. The trio includes:
HP VirtualSystem - HP’s answer to vStart, Flex Pod and vBlocks, VirtualSystem is a pre-integrated stack of servers (blade and racked options), HP network switches and HP Converged Storage (3Par and Left Hand Networks iSCSI) along with software, including the relevant OS and virtualization software. Clients can choose from four scalable deployment options that support up to 750, 2500 or 6000 virtual servers or up to 3000 virtual clients. It supports Microsoft and Linux along with VMware and Citrix. Since this product is new, announced within weeks of the publication of this document, we have had limited exposure it, but HP claims that they have added significant value in terms of optimized infrastructure, automation of VM deployment, management and security. In addition, HP will be offering a variety of services and hosting options along with VirtualSystem. Forrester expects that VirtualSystem will change the existing competitive dynamics and will result in a general uptick of interest it similar solutions. HP is positioning VirtualSystem as a growth path to CloudSystem, with what they describe as a “streamlined” upgrade path to a hybrid cloud environment.
When Cisco began shipping UCS slightly over two years ago, competitor reaction ranged the gamut from concerned to gleefully dismissive of their chances at success in the server market. The reasons given for their guaranteed lack of success were a combination of technical (the product won’t really work), the economics (Cisco can’t live on server margins) to cultural (Cisco doesn’t know servers and can’t succeed in a market where they are not the quasi-monopolistic dominating player). Some ignored them, and some attempted to preemptively introduce products that delivered similar functionality, and in the two years following introduction, competitive reaction was very similar – yes they are selling, but we don’t think they are a significant threat.
Any lingering doubt about whether Cisco can become a credible supplier has been laid to rest with Cisco’s recent quarterly financial disclosures and IDC’s revelation that Cisco is now the No. 3 worldwide blade vendor, with slightly over 10% of worldwide (and close to 20% in North America) blade server shipments. In their quarterly call, Cisco revealed Q1 revenues of $171 million, for a $684 million revenue run rate, and claimed a booking run rate of $900 million annually. In addition, they placed their total customer count at 5,400. While actual customer count is hard to verify, Cisco has been reporting a steady and impressive growth in customers since initial shipment, and Forrester’s anecdotal data confirms both the significant interest and installed UCS systems among Forrester’s clients.
A recent RFP for consulting services regarding strategic platforms for SAP from a major European company which included, among other things, a request for historical and forecast data for all the relevant platforms broken down by region and a couple of other factors, got me thinking about the whole subject of the use and abuse of market share histories and forecasts.
The merry crew of I&O elves here at Forrester do a lot of consulting for companies all over the world on major strategic technology platform decisions – management software, DR and HA, server platforms for major applications, OS and data center migrations, etc. As you can imagine, these are serious decisions for the client companies, and we always approach these projects with an awareness of the fact that real people will make real decisions and spend real money based on our recommendations.
The client companies themselves usually approach these as serious diligences, and usually have very specific items they want us to consider, almost always very much centered on things that matter to them and are germane to their decision.
The one exception is market share history and forecasts for the relevant vendors under consideration. For some reason, some companies (my probably not statistically defensible impression is that it is primarily European and Japanese companies) think that there is some magic implied by these numbers. As you can probably guess from this elaborate lead-in, I have a very different take on their utility.
Hewlett-Packard reported its financial results for the quarter ending on April 30, 2011, early in the day on May 17, a day sooner than expected. Dell reported its financial results the same day, at its normal time at the end of the day. In many ways, as we will see in a minute, the results were similar. Yet the financial market reaction was dramatically different. HP's stock price dropped by 7% during the day, while Dell's stock price rose by almost 7% in after-hours trading. Bloomberg News, in its article on the two companies' results, headlined what it saw as the reason for the different performance: "Dell Shares Rise After Corporate Spending Gives Company Edge Over Rival HP."
I am not a stock analyst, nor is Forrester in the business of analyzing or forecasting stock performance. But the divergent responses of the stock market to the financial results of HP versus Dell do have implications for vendor strategy, while the underlying results show where the tech market is headed.
First, let's compare the actual numbers. HP's revenues in the quarter were up by 3%, and right in line with expectations, while Dell's revenues were just 1% higher, and lower than expectations. Dell's sales to business rose by 3%, while HP's sales increased by 8%. Dell's sales to consumers fell by 7%, slightly better than the 8% drop in HP's sales to consumers. So far, very similar numbers between the two vendors, with HP actually doing better than Dell in the quarter. So, why the market perception that Dell outperformed HP?