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The
Intel server market has finally come of age. After years of
being rubbished by the RISC crowd, servers powered by Intel’s
Xeon processor (not Itanium!) started handling mission-critical
chores. While Intel clusters are taking off, unit sales of
Intel boxes have long outshipped RISC. Now they look like
they’ll do the same on the revenue front in the near
term. From what we gathered, AMD made little or no impact
in the server market this year. But that could change in a
big way when the chipmaker’s much touted 64-bit chip
Hammer comes out later this year. With backward compatibility
that lets it run existing 32-bit applications (pretty much
every bit of enterprise software in use today) without the
need for re-compilation, which has prevented Itanium from
soaring, it could see AMD grab a chunk of the server pie.
As it was, MNC vendors innovated quite a bit in a shrinking
market and buyers were offered better value and technology
at the same price. Entry-level MNC server prices have dropped.
Acer kicked off this trend and you find MNC single CPU servers
priced at 80,000 with the bells and whistles formerly found
only on mid-tier models.
And the winner is...Compaq
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Compaq’s
Talukdar says blade servers enable enterprises
to respond quickly to changing business needs |
Compaq
held its traditional lead in the Intel space with a 39.5 percent
share of the SIAS segment.
Strengths: Compaq has been the first off the mark in
adopting new technology such as its RAID memory (Redundant
array of inexpensive DIMMs). This is similar to RAID technology
for storage where redundant memory modules with parity information
is stored on another module. If one fails, data can be reconstructed
from the others using the parity information.
Rack servers continue to account for 20 percent of Compaq’s
server sales. To buttress its line, the company launched blade
servers. 280 blade servers fit into a rack as against 42 earlier.
“You can deploy an entire rack of 280 blade servers in
40 minutes,” says Pallab Talukdar, director-enterprise
products, Compaq Computer (India).
Weaknesses: The uncertainty generated by the proposed
merger with HP is perhaps the only chink in Compaq’s
armour.
Opportunities: Compaq has a solid brand in Intel servers,
and in India it has not had to contend with Dell to the same
extent that it has in other geographies.
Threats: The merger, for one. No one is sure of what’s
going to happen. Dell, for another. While Dell hasn’t
yet made the kind of impact in India that it has elsewhere,
with Internet usage surging and bandwidth prices dropping,
it could make its move anytime.
HP: Innovation to the fore
 Strengths:
HP has been innovative in the Intel space with models such
as the LH 6000 (a multi-processor server with up to six 700-900
MHz Xeon processors, up to 8 GB RAM and 12 hard drives with
dual channel RAID on the board) which was a smash hit. The
last two quarters have seen this model selling over two hundred
units per quarter at an average cost of Rs 8 to 8.5 lakh.
“Most customers wanting to buy a Xeon server want to
buy an 8 way Xeon cluster. But an 8 way box only supports
two hard drives. CIOs have to settle for 4-way servers due
to the fact that you can buy three 4-way boxes for the price
of one 8-way box. That’s where we offer them the advantage
of buying an HP 2, 3 or 4 way box and expanding up to six
Xeon processors,” says Raghu Raman, server marketing
manager, Business Customer Sales Organisation (BCSO), Hewlett-Packard.
HP
has a comprehensive line up with rack servers, blade servers
and SMP boxes. Its servers start at Rs 80,000, a price point
that SMEs can afford.
HP is firmly entrenched in the financial services and insurance
market. Raman explains, “Public sector banks have thousands
of branches. SBI computerises over a thousand branches every
year. At the branch level an Intel server is ideal for connecting
up to 15 PCs with either NetWare or Windows 2000. Insurance
companies also account for substantial orders, particularly
NIA, UIIC and NIC. These three buy only MNC servers. LIC buys
local brands too.”
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Ganesh
says IBM sees Linux as the ‘one open source environment
from the lowest server to the highest mainframe’ |
Weaknesses:
Despite good technology and a comprehensive line of products,
HP has been unable to gain a leadership position in either
the Intel or the RISC market. It has been at the No 3 slot
for the greater part.
Opportunities: HP’s acquiring Compaq. If it plays
its cards right it could wind up with a 50 percent or better
share of the Intel server market.
Threats: Compaq is a bigger brand in the server segment.
If the merger goes through, HP will be in the same position
as Coke was after it acquired Thums Up.
Acer: Growing in a shrinking market
Despite it being a gloomy year for the Intel server segment,
Acer saw shipments rise 40 percent in units over the 2,000
servers the company sold in 2000.
Strengths: An absolute focus on Intel servers. Acer,
unlike every other vendor profiled here, sells only Intel
boxes. This helps it adopt fresh technology from Intel at
a rapid pace. Acer made a transition to a Tualatin-based product
range in November 2001 with the introduction of its G500 and
G610 servers. The G500 was the first SIAS server in the country
to ship with DDR-SDRAM.
That doesn’t mean that the company slavishly adopts every
trend from Intel. “Unlike IBM and HP who moved to the
Tualatin for their uniprocessor servers, we moved from the
PIII to the P4,” says Sam Oommen Thomas, senior product
marketing manager, Acer India.
 Acer’s
strategy has focused on delivering MNC products at desi price
points and it has worked very well to date. The company focused
on the banking and financial services vertical in 2000, and
that paid off in 2001. Acer’s bread and butter model
was the Altos 350, a P4 single CPU machine that sold well
with banks.
Weaknesses: Being a pure Intel play means that Acer
doesn’t have any products at the very high-end. Where
IBM has its p, i and zSeries and Compaq has its Himalaya and
Alpha boxes, Acer has nothing to offer in competition.
Opportunities: Acer’s biggest opportunity lies
in the fact that it has a relatively small chunk (less than
10 percent in units) of the Intel server market which gives
it plenty of headroom for growth. The company has done well
in tender related business and it is planning to beef up its
channel sales, which is more lucrative.
Threats: Server consolidation, if it does happen in
a big way, would be unsettling for the company with its lack
of very high-end servers that can substitute for dozens or
even hundreds of servers.
IBM: Linux is the word
Strengths: IBM is the only vendor to have a clear Linux
strategy. Big Blue has thrown its considerable muscle behind
the operating system and sees it as “one open source
environment from the lowest server to the highest mainframe,”
says M Ganesh, vice president, Enterprise Server Group, IBM
India. “We offer two choices on all four server lines.
All our systems come with logical partitioning and you can
dedicate an OS to a particular CPU. This lets an enterprise
run its legacy application on one processor, for instance,
and use new Linux-based applications on the second processor.”
Weaknesses: While IBM has very competitively priced
products, the market perception is that it has yet to catch
up with its focus on SMEs.
Opportunities: IBM has hinted that what we have seen
so far of its Linux strategy is just the tip of the iceberg.
The company can make tremendous gains in the market if it
continues to execute its Linux strategy better than the rest
of the pack.
Threats: The Intel market usually ends up becoming
commoditised and IBM hasn’t traditionally played well
in such markets—take the PC market for instance. The
company is innovating furiously to avoid this phenomenon.
Dominant
Intel faces AMD’s Hammer
The
Indian server market is set for exciting times with arch rivals
Intel and AMD planning to launch a slew of processors for
servers. While Intel has close to 100 percent of the Indian
x86 server market, AMD’s upcoming chips could change
that. Intel has a two pronged strategy. On one hand it is
slowly rolling out Itanium, its 64 bit platform, while at
the same time it’s beefing up its Xeon range of 32-bit
server chips. “The last six months have witnessed a significant
lead for Xeon in the Indian market. Lots of products are being
developed locally using Xeon as a platform,” says Narendra
Bhandari of Intel Asia Pacific. The company will be launching
a new processor, code named Foster, in March 2002. Bhandari
admits that Foster will be Intel’s thrust area this year
in the server space and the company will be introducing Hyper-Threading
in this chip.
AMD is going to launch Hammer in the second half of 2002.
This will be AMD’s answer to Itanium, a 64-bit processor.
Around five months ago, the company launched a dual 32-bit
Athlon MP processor. “AMD introduced its first multiprocessing
platform in Q2, 2001 with the announcement of the AMD Athlon
MP processor and the AMD 761MP chipset. We have a product
roadmap for the server and workstation market leading to the
Hammer family of 64-bit processors expected to be announced
sometime in the second half of this year,” says Sanjeev
Keskar, country manager, AMD Far East. What AMD India needs
is a comprehensive strategy aimed at gaining the confidence
of the developer community in getting applications developed
on its architecture.
AMD could pose a threat to Intel in 64-bit computing since
AMD’s Hammer is expected to be backward compatible, unlike
Itanium. Hammer is backwardly compatible and can execute legacy
x86 32-bit applications. In Itanium’s case, applications
will need to be recompiled for the chip’s 64-bit architecture.
AMD’s argument about its x86-64 family is that it will
be just as easy to run software on this platform as it was
on the 32-bit platform, while Intel’s customers will
have to plan and invest in moving their current code base
to the Itanium platform.
Intel has been working closely with Independent Software Vendors
(ISV) to port enterprise applications to Itanium and is readying
McKinley but AMD could pip Intel to the post if Hammer takes
off in a big way. Keskar adds that AMD is also going to work
with software companies for giving momentum to Hammer.
Another issue is the availability of Hammer-based server boxes
because AMD has traditionally been strong in the assembler
segment, which cannot be counted upon in the case of servers.
“We are working with local OEMs to introduce branded
server products based on AMD Athlon MP processors, besides
also focusing on white box server vendors as well which is
apparently a sizeable market,” says Keskar. So far, none
of the boxed vendors have announced plans for launching AMD-based
server boxes. The big question is—are enterprises ready
to embrace AMD’s Hammer for their mission critical applications?
The answer seems to be a clear no at present with none of
the vendors ready to ship AMD-based servers.
Intel has built a strong distribution network with its Genuine
Intel Dealer (GID) programme. AMD’s success in the server
segment will also depend upon the business segments it is
going to target, apart from its channel strategy.
Intel is going to introduce Hyper-Threading technology with
its Foster range of processors. “Hyper-Threading technology
allows multi-threaded operating systems and applications to
view a single physical processor as if it were two logical
processors. This technology can deliver up to 30 percent performance
boosts for multi-threaded applications, enabling faster e-business
transactions, enterprise server response times and the ability
to handle more workloads per server,” says Bhandari.
Till sometime ago, Intel was looked upon as a pro-Microsoft
vendor known for optimising the performance of its products
for Microsoft’s offerings. But things have started changing
now. Intel is supporting all operating systems that are compatible
with Intel Architecture (IA)-based solutions, including Linux.
“We have been tracking the developments in the market
and on the 32 bit computing side, the last 18 months have
witnessed Linux gaining momentum,” Bhandari admits. Intel
is now working closely with the open source community in optimising
Linux kernels for its processors. “We will continue to
invest in Linux and Windows,” he says.
This year, Intel has chalked out a vertical strategy for India
wherein the telecom, finance and manufacturing segments will
be targeted. Bhandari says Web services will be the most happening
space in 2002. “With vendors coming out with various
platforms for Web services, Intel is positioned to drive this
initiative. We are aiming at industry leadership,” Bhandari
explains. Intel is shipping its first carrier-grade server
building block products that conform to telecommunications
reliability requirements. The new server products conform
to strict reliability requirements as defined by the Network
Equipment Building Specification (NEBS) and European Telecom
Standards Institute (ETSI). Carrier-grade servers comply with
telecommunications industry requirements for platform ruggedness
to survive environmental hazards such as excessive heat and
cold, fires and earthquakes.
This is an alarming issue for AMD as Intel has always been
driving its initiatives by a vertical strategy, for which
it has no answer. A number of computer OEMs and telephone
equipment manufacturers are expected to start shipping systems
based on Intel’s new platforms in the first quarter of
2002. The new product family will initially include Pentium
III processors in high-density form factors, offered with
a choice of operating systems such as Windows, Linux and Unix.
AMD is yet to talk about any client acquisition, though it
has launched its 32-bit dual processor almost four months
back. If at all the company has to emerge as a serious threat
to Intel, AMD will have to get the basics right. Enhancing
channel presence and aligning with ISVs will be key to AMD’s
success. And success for AMD means making its presence felt
by winning substantial mind share first and only then thinking
of posing any threat to Intel.
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