Dell's 8-CPU Intel Servers Increasing Its Enterprise Focus

Product Background

In late September, 1999, Dell Computer Corporation began shipments of its eight-CPU Intel server, the PowerEdge 8450. The PowerEdge 8450 is part of the next generation of Intel servers (along with offerings from Compaq, HP, IBM, and others) which utilize the Profusion chipset. (This chipset allows servers to break through the previous limitation of four CPUs for the Intel architecture.) The PE 8450 is based on Intel's OCPRF100 server (also known as "Saber"), which Dell has modified to improve its serviceability and to add an improved peripheral bay.

This product is geared toward the enterprise computing segment. As with most enterprise-class servers, the 8450 must be racked, and needs other hardware (primarily disk drives) to support its configuration. This product is aimed at the large datacenter/data warehouse environments, as well as other large-scale computing environments. The 8450 will also be used to consolidate and upgrade existing servers.

Dell's main competitors in this space are Compaq, HP, and IBM. There are other vendors producing eight-way Intel servers (e.g. Unisys, Hitachi), but we do not believe they will be serious market share competitors. (Market share figures for Intel servers is shown in Table 1 and Graph 1.) In general, the Intel server market is growing, and these products will satisfy pent-up demand, but we do not expect the volumes to be significant (when compared to four-way servers) until next year.

Fig. 1

Table 1: Intel Server Market Share 2Q '99

Product Strategy and Trajectory

Dell is positioning the PowerEdge 8450 series to address business-critical applications in three key market areas:

1. Compute- and memory-intense applications (e.g. large databases)

2. Enterprise messaging (e.g. MS Exchange)

3. Multi-user Windows NT applications

4. Server consolidation and scalable enterprise computing

Clearly, Dell is focusing on large enterprises and enterprise applications. In addition to its aggressive and focused growth in the last three years, Dell is now moving toward being a complete solution provider. This is evident from the recent deal with IBM Global Services for customer service and support, as well as the recent contract where the PowerEdge servers will run Sun's Solaris operating system.

Although the eight-way servers (in general) are now the most powerful Intel servers available, this position is expected to last only until Merced/McKinley arrive 12 months from now for Merced (80% probability), two years for McKinley (60% probability). Since McKinley, not Merced, is expected to provide the performance leap, this should give the current eight-way servers approximately 18-24 months at the top of the Intel scale. After that, these systems become "mid-range" products. Until Merced ships, we expect the market size for eight-way servers to be approximately $5-$8 Billion. (Note: Merced will not immediately "cannibalize" the market for eight-way servers, because of the change from the current IA-32 architecture to Merced's IA-64 architecture. This change will effect much more than hardware, and therefore migration will not be immediate.)

Product Strengths

Performance and Price/Performance: Dell's record of excellent price/performance is expected to continue with the PE 8450. We expect the only close competition to be from Compaq ($18.46/tpmC for the ProLiant 8500). We also expect Dell to meet or exceed Compaq's mark of 40,368 tpmC (also for the ProLiant 8500) within three months.

I/O Feature Set: Dell has provided PCI Hot Plug for Windows NT 4.0, correcting a deficiency present in the PowerEdge 6300/6350. In addition, the PE 8450 has four 66 MHz PCI slots, more than the two available from Compaq.

Serviceability: The PowerEdge 8450 has tool-free access to, and removal of, all the key components about which a customer (or service technician) would care: power supplies, fans, disk drives, PCI slots. These features exceed those available in the Intel design, but Compaq's ProLiant 8X00 holds a slight edge here.

General:

Dell's customer satisfaction is very high, we expect that will continue.

Product Challenges

Incomplete OS Support: Until the end of October, the 8450 will only support the various versions of Windows NT, in contrast to the competition which offers Novell NetWare, SCO UNIX/UnixWare, et al. (Solaris support will be available in late October, NetWare is scheduled to be available in late November.) Windows NT is not yet considered a robust enterprise-class OS, so the lack of alternatives is a deficiency. Dell will certify other OSes (through its DellPlus group), but this is a less compelling message than having those OSes installed in a production environment.

AC Voltage Support: The PowerEdge 8450 requires 208VAC, unlike Compaq's ProLiant 8000 and 8500, which can run off either 110 VAC or 208 VAC. Although 208VAC is required for either system (Compaq or Dell) to run a fully-loaded server, having the option is a modest benefit.

Redundancy: Although Dell's system provides redundancy in most subsystems (fans, power supplies, etc.), there are a couple of areas where there could be improvement. In the power subsystem, Dell has redundant power supplies, while Compaq has redundant Voltage Regulator Modules (VRMs) in addition to the redundant system supplies. (Note that redundant supplies have become a requirement not an added feature for enterprise class systems.) For cooling: the system is characterized by Dell as N+1 redundant, that is five fans plus one backup fan. Customers may prefer 2N redundancy, for a broader safety margin.

General:

Technology: As mentioned earlier, Dell purchases the board set directly from Intel. Given that, the logical conclusion would be that Intel would be able to release this system for shipment before Compaq could ship the ProLiant 8X00. However, this has not happened, due to the current problems with some of the Xeon 550 MHz processors and how they work with the Saber board set (See TEC's News Analysis: "Flaw in Intel Xeon 550 Chip Set: Shipments Stopped" September 29th, 1999). This is not Dell's fault, and it will not be a long-term problem, but the situation bears scrutiny nonetheless.

Vendor Recommendations

Although Dell has made its name in the Windows NT market, it should consider offering more than just one factory-installed operating system. UNIX is not dead, and the acquisition of ConvergeNet (with its ability to operate SANs in heterogeneous OS environments) should lead Dell into more than just NT. The ConvergeNet acquisition also allows Dell to provide a more flexible SAN solution than it had previously, and Dell should market this aspect aggressively. Using the DellPlus organization to provide installation and support for other OSes is a way of addressing this, but customers may prefer a factory installed solution.

Dell should use its clout with Intel to get power supplies that operate in either voltage range (110/208 VAC), since this puts Dell at a disadvantage relative to Compaq and IBM.

User Recommendations

The PowerEdge 8450 is a good choice for those clients who have high-end computing environments, such as data warehouses or server consolidation, and users who need high performance computing plus the flexibility of mixing and matching components in a rack. The feature set and hardware reliability features are good, and the only technology concern is based in the Profusion chipset, due to its newness. However, Dell's use of an Intel-designed board set should reduce Profusion-related concerns, after the current Xeon/Saber problems are resolved.

The limited OS offerings should be used as leverage, especially by customers who need something other than Windows NT.