Cover Story

Upset in the Unix server mart

HP pipped Sun to the post in the third quarter, an upset considering that Sun has been the traditional leader and continues to lead in YTD rankings. Can HP maintain the robust growth it generated in Q3? Akhtar Pasha examines its chances.

Though HP has beaten Sun Microsystems in the Indian Unix server market during Q305 by a margin of a million dollars (Source: IDC India), the fact remains that Sun continues to lead in the overall YTD sales (Q1 to Q3 2005). HP won in the mid-range Unix server segment which accounted for 65 percent of overall Unix revenues. Here HP accounted for 42.6 percent ($15.92 million) of the total $37.40 million in the mid-range server sales in Q305. Similarly at the high-end, HP grossed $4.70 million of the $6.33 million total—a market share of 74.3 percent in the JAS quarter.

Commenting on HP’s success in Q3 an analyst sounds a word of caution, “Leadership of a particular vendor is determined by a consistent Quarter-on-Quarter growth and not just one big quarter. HP needs to show its leadership in the next few quarters to be consistent.”

IDC’s figures show HP growing 42 percent vs overall market growth of 8.2 percent in Q3 vis-a-vis Q2. Digging a little deeper one finds that HP achieved this hyper-growth on the back of some large deals in banking, telecom and manufacturing. Pallab Talukdar, Director, Enterprise Marketing & Alliance, Technology Solutions Group, HP India Sales says, “We had more high-end wins than the competition. Our commitment is to offer ‘more to customers’ and protect their investments. This has helped drive our Unix server growth.” The company revenue growth was especially robust when it came to the Superdome (in the high-end Unix market) and Integrity (at the mid-range Unix server market) server families.

The biggest deal was with seven subsidiaries of the State Bank of India (SBI). These institutions are consolidating on account of core-banking rollouts by the parent bank. SBI subsidiaries have bought three HP Superdomes (PA-RISC with HP UX11i), each having a whopping 100 CPUs. That’s 300 CPUs in a single deal. Talukdar says, “This is perhaps the largest order in the history of Indian Unix computing.”

Other big deals were those involving BSNL in telecom and Ashok Leyland in manufacturing. Talukdar adds, “Manufacturing companies are looking beyond ERP and deploying SCM and CRM to drive their business.”

Talukdar attributes HP’s success to the fact that HP has the widest product portfolio supporting multiple processors (PA-RISC, Itanium, Alpha) with its three OS strategy HP UX11i, Window and Linux.

A little bit of services

HP Services is playing a critical role in HP’s Unix success. Talukdar says, “HP Services offers end-to-end IT management services. The unit has bagged large-scale, multi-year contracts. Ashok Leyland is a good example of this trend. Recently UCO Bank collaborated with HP to deploy a Core Banking Solution (Finacle) across 1,000 branches. That is a five-year project.”

The fact is that HP is protecting existing customer investments in PA-RISC and Alpha while giving organisations the flexibility to deploy mixed architectures with an upgrade path from PA-RISC to Itanium 2. Sun Microsystems sees this as an opportunity to tap HP’s customers who are on older architectures such as PA-RISC and Alpha. Anil Valluri, Country Director, Client Solutions Organisation, Sun Microsystems India says, “HP’s customers who are planning to move from PA-RISC or Alpha to Itanium 2 will have to deal with registry settings that are so different from both these architectures.” Sun is going after these companies with its Sun Fire UltraSPARC IV+ systems with what it claims is a mix of generations and clock speed that co-exist with a clear roadmap and support. HP is unfazed by this statement. Talukdar rebuts, “SAP and Oracle have endorsed the mixed architecture for both database and application, which means that it will not affect a customer’s business even if it changes architectures. Additionally, we are using Simple Migration Tool (SMT) that allows our customers to cut migration time to 24 hours. There is no disruptive change. We are conducting a 15-day live project for an existing customer wherein they will be migrating from Alpha to Itanium 2 for their core business application.”

The battle won, the war rages on

"The biggest deal was with seven subsidiaries of the State Bank of India.The subsidiaries have bought three HP Superdomes each having 100 CPUs" - Pallab Talukdar Director Enterprise Marketing & Alliance Technology Solutions Group HP India Sales

HP intends to maintain its assault on Sun in the Unix market. To this end, it is following up with three new products to strengthen its standing. In the high-end, HP will permit the co-existence of PA-RISC with Itanium 2 in its Superdome family, letting customers consolidate or upgrade while maintaining complete data compatibility. HP claims that this is the first time wherein two processor architectures will co-exist in the same platform. Superdome users will be able to have multiple processor architectures, workloads and operating systems—all running simultaneously on the same server. Moreover, the company’s offering up to 10 partitions on a single CPU and the partitions are electrically separate.

Next up is HP’s Integrity Virtual Server Environment (VSE) for the HP Integrity and 9000 server lines. These are targeted at helping IT departments get a quick RoI by optimising server resource utilisation in real-time based on business priorities. Features include hard and soft partitioning, HP Serviceguard and a workload manager among others. HP is also expanding its portfolio of Integrity Server blades (BL60p) based on the Itanium processor running HP UX11i. These are expected in early 2006. Support for Windows and Linux will be announced later. These blades include server, storage and networking solutions. Integrity Virtual Machines permit up to six HP UX11i instances (six applications) on a single blade.

HP has more product announcements slated for 2006. Talukdar believes that the company’s Unix server revenues will be bolstered by the efforts of the BFSI segment to comply with norms such as BASEL II, T+1 settlement (Straight Through Processing helps banks clear outstation payments in a working day). Then are the government IT projects that are scaling up from pilots such as state data centres and state wide area networking projects.

Don’t count Sun out

Sun hasn’t been sitting idle. It launched the Galaxy range of AMD Opteron based servers 1-, 2-, 4- and 8-way running Solaris 10. H2 2005 saw the UltraSPARC IV+ making its debut, it is 1.7 times faster (double the throughput) than its predecessor the UltraSPARC IV. ICICI Bank, Tata Teleservices and Citibank all went for it. The recently launched Sun Fire T1000 and T2000, based on the UltraSPARC T1 (Niagara) now called CoolThreads, supposedly offer a five times increase in performance with one-fifth the power consumption in a quarter of space of competing products. “In the large data centres where cooling and space are constraints, the T1000 (4- or 8-core, consuming 180 watts of power) and T2000 (4-, 6- and 8-core, consuming 275 watts) will be big in the Unix market. It is priced aggressively at Rs 1.9 lakh and 4.9 lakh respectively,” says Valluri. Sun is running Coolthreads’ ‘Try & Buy’ programme wherein large customers can try these systems and return them if dissatisfied. “We are funding 60 systems in India with ‘no obligation.’ Given these technology developments we are still three to five years ahead of IBM and HP,” says Valluri.

In YTD statistics, Sun Microsystems continues to dominate the Unix server market. Analysts believe that Sun’s Niagara offering is disruptive. There is nothing in the near term that can compete with this chip. What is missing, however, in Sun’s strategy is a roadmap. The company needs to set release dates for new chips so that customers are able to plan ahead.

akhtar@expresscomputeronline.com