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.
I just spent several days at Dell World, and came away with the impression of a company that is really trying to change its image. Old Dell was boxes, discounts and low cost supply chain. New Dell is applications, solution, cloud (now there’s a surprise!) and investments in software and integration. OK, good image, but what’s the reality? All in all, I think they are telling the truth about their intentions, and their investments continue to be aligned with these intentions.
As I wrote about a year ago, Dell seems to be intent on climbing up the enterprise food chain. It’s investment in several major acquisitions, including Perot Systems for services and a string of advanced storage, network and virtual infrastructure solution providers has kept the momentum going, and the products have been following to market. At the same time I see solid signs of continued investment in underlying hardware, and their status as he #1 x86 server vendor in N. America and #2 World-Wide remains an indication of their ongoing success in their traditional niches. While Dell is not a household name in vertical solutions, they have competent offerings in health care, education and trading, and several of the initiatives I mentioned last year are definitely further along and more mature, including continued refinement of their VIS offerings and deep integration of their much-improved DRAC systems management software into mainstream management consoles from VMware and Microsoft.
Well actually I meant mobs of flash, but I couldn’t resist the word play. Although, come to think of it, flash mobs might be the right way to describe the density of flash memory system vendors here at Oracle Open World. Walking around the exhibits it seems as if every other booth is occupied by someone selling flash memory systems to accelerate Oracle’s database, and all of them claiming to be: 1) faster than anything that Oracle, who already integrates flash into its systems, offers, and 2) faster and/or cheaper than the other flash vendor two booths down the aisle.
All joking aside, the proliferation of flash memory suppliers is pretty amazing, although a venue devoted to the world’s most popular database would be exactly where you might expect to find them. In one sense flash is nothing new – RAM disks, arrays of RAM configured to mimic a disk, have been around since the 1970s but were small and really expensive, and never got on a cost and volume curve to drive them into a mass-market product. Flash, benefitting not only from the inherent economies of semiconductor technology but also from the drivers of consumer volumes, has the transition to a cost that makes it a reasonable alternative for some use case, with database acceleration being probably the most compelling. This explains why the flash vendors are gathered here in San Francisco this week to tout their wares – this is the richest collection of potential customers they will ever see in one place.
In the good old days, computer industry trade shows were bigger than life events – booths with barkers and actors, ice cream and espresso bars and games in the booth, magic acts and surging crowds gawking at technology. In recent years, they have for the most part become sad shadows of their former selves. The great SHOWS are gone, replaced with button-down vertical and regional events where you are lucky to get a pen or a miniature candy bar for your troubles.
Enter Oracle OpenWorld. Mix 45,000 people, hundreds of exhibitors, one of the world’s largest software and systems company looking to make an impression, and you have the new generation of technology extravaganza. The scale is extravagant, taking up the entire Moscone Center complex (N, S and W) along with a couple of hotel venues, closing off a block of a major San Francisco street for a week, and throwing a little evening party for 20 or 30 thousand people.
But mixed with the hoopla, which included wheel of fortune giveaways that had hundreds of people snaking around the already crowded exhibition floor in serpentine lines, mini golf and whack-a-mole-games in the exhibit booths along with the aforementioned espresso and ice cream stands, there was genuine content and the public face of some significant trends. So far, after 24 hours, some major messages come through loud and clear:
I just attended IDF and I’ve got to say, Intel has certainly gotten the cloud message. Almost everything is centered on clouds, from the high-concept keynotes to the presentations on low-level infrastructure, although if you dug deep enough there was content for general old-fashioned data center and I&O professionals. Some highlights:
Chips and processors and low-level hardware
Intel is, after all, a semiconductor foundry, and despite their expertise in design, their true core competitive advantage is their foundry operations – even their competitors grudgingly acknowledge that they can manufacture semiconductors better than anyone else on the planet. As a consequence, showing off new designs and processes is always front and center at IDF, and this year was no exception. Last year it was Sandy Bridge, the 22nm shrink of the 32nm Westmere (although Sandy Bridge also incorporated some significant design improvements). This year it was Ivy Bridge, the 22nm “tick” of the Intel “tick-tock” design cycle. Ivy Bridge is the new 22nm architecture and seems to have inherited Intel’s recent focus on power efficiency, with major improvements beyond the already solid advantages of their 22nm process, including deeper P-States and the ability to actually shut down parts of the chip when it is idle. While they did not discuss the server variants in any detail, the desktop versions will get an entirely new integrated graphics processor which they are obviously hoping will blunt AMD’s resurgence in client systems. On the server side, if I were to guess, I would guess more cores and larger caches, along with increased support for virtualization of I/O beyond what they currently have.
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?
NetApp recently announced that it was acquiring Akorri, a small but highly regarded provider of management solutions for virtualized storage environments. All in all, this is yet another sign of the increasingly strategic importance of virtualized infrastructure and the need for existing players, regardless of how strong their positions are in their respective silos, to acquire additional tools and capabilities for management of an extended virtualized environment.
NetApp, while one of the strongest suppliers in the storage industry, not only faces continued pressure from not only EMC, which owns VMware and has been on a management software acquisition binge for years, but also renewed pressure from IBM and HP, who are increasingly tying their captive storage offerings into their own integrated virtualized infrastructure offerings. This tighter coupling of proprietary technology, while not explicitly disenfranchising external storage vendors, will still tighten the screws slightly and reduce the number of opportunities for NetApp to partner with them. Even Dell, long regarded as the laggard in high-end enterprise presence, has been ramping up its investment management and ability to deliver integrated infrastructure, including both the purchase of storage technology and a very clear signal with its run at 3Par and recent investments in companies such as Scalent (see my previous blog on Dell as an enterprise player and my colleague Andrew Reichman’s discussion of the 3Par acquisition) that it wants to go even further as a supplier of integrated infrastructure.
Fujitsu? Who? I recently attended Fujitsu’s global analyst conference in Boston, which gave me an opportunity to check in with the best kept secret in the North American market. Even Fujitsu execs admit that many people in this largest of IT markets think that Fujitsu has something to do with film, and few of us have ever seen a Fujitsu system installed in the US unless it was a POS system.
So what is the management of this global $50 Billion information and communications technology company, with a competitive portfolio of client, server and storage products and a global service and integration capability, going to do about its lack of presence in the world’s largest IT market? In a word, invest. Fujitsu’s management, judging from their history and what they have disclosed of their plans, intends to invest in the US over the next three to four years to consolidate their estimated $3 Billion in N. American business into a more manageable (simpler) set of operating companies, and to double down on hiring and selling into the N. American market. The fact that they have given themselves multiple years to do so is very indicative of what I have always thought of as Fujitsu’s greatest strength and one of their major weaknesses – they operate on Japanese time, so to speak. For an American company to undertake to build a presence over multiple years with seeming disregard for quarterly earnings would be almost unheard of, so Fujitsu’s management gets major kudos for that. On the other hand, years of observing them from a distance also leads me to believe that their approach to solving problems inherently lacks the sense of urgency of some of their competitors.
Historically, the positioning of Dell versus its two major competitors for high-value enterprise business, particularly where it involved complex services and the ability to deliver deeply integrated infrastructure and management stacks, has been as sort of an also ran. Competitors looked at Dell as a price spoiler and a channel for standard storage and networking offerings from its partners, not as a potential threat to the high-ground of being able to deliver complex integrated infrastructure solutions.
This comforting image of Dell as being a glorified box pusher appears to be coming to an end. When my colleague Andrew Reichman recently wrote about Dell’s attempted acquisition of 3Par, it made me take another look at Dell’s recent pattern of investments and the series of announcements they have made around delivering integrated infrastructure with a message and solution offering that looks like it is aimed squarely at HP and IBM's Virtual Fabric.
Every spring I’m faced with the wonderful opportunity – and challenge – of choosing the best questions for Forrester's annual 20 minute Web survey of commercial buyers of IT infrastructure and hardware across North America and Europe.
As technology industry strategists, what themes or hypotheses in IT infrastructure do you think we should focus on? What are the emerging topics with the potential for large, long term consequences, such as cloud computing, that you’d like to see survey data on? Please offer your suggestions in the comments below by May 21!
This year, I’m proposing the following focus areas for the survey:
New client system deployment strategies– virtual desktops, bring-your-own-PC, Win 7, smartphones, and tablets
Hypothesis: Early adopters are embracing virtual desktops and bring-your-own-PC, but the mainstream will proceed with standard Win 7 deployments